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Airlines

Name: KLM - ROYAL DUTCH AIRLINES
7JetSet7 Code: KLM
Status: Operational
Region: EUROPE
City: AMSTERDAM
Country: THE NETHERLANDS
Employees 104721
Web: klm.com
Email:
Telephone: +31 (20) 649 9123
Fax: +31 (20) 649 3113
Sita: SPLTAKL
Background
(definitions)

Click below for data links:
KLM-2003-09 MERGER-A
KLM-2003-09 MERGER-B
KLM-2003-09 MERGER-C
KLM-2003-09 MERGER-D
KLM-2003-11 777 EFB-A
KLM-2003-11 777 EFB-B
KLM-2003-TRAFFIC
KLM-2003-WLDTOP25
KLM-2004-02 NEWS MD-11
KLM-2004-05 MERGER-A
KLM-2004-05 MERGER-B
KLM-2004-07 NEWS MERGER
KLM-2004-11 85 YRS-A
KLM-2004-11 85 YRS-B
KLM-2004-11 85 YRS-C
KLM-2004-11 85 YRS-D
KLM-2004-11 85 YRS-E
KLM-2004-11 85 YRS-F
KLM-2004-11 85 YRS-G
KLM-2004-11 EFB-A
KLM-2004-11 EFB-B
KLM-2004-11 EFB-C
KLM-2004-1ST6MTHS-TRAFFIC
KLM-2004-1STQTOPRPK
KLM-2004-WORLD-RPK
KLM-2005-08-A
KLM-2005-08-B
KLM-2005-08-C 1ST A330
KLM-2005-10-PTS 737-700
KLM-2005-12 A318 NOSE MERGER
KLM-2005-TOP-RPK
KLM-2006 WLD TOP RPK
KLM-2006-1ST-6-MTHS
KLM-2006-TOP-WLD-CARGO
KLM-2006-WLD-TOP-RPK
KLM-2007-STATS
KLM-2007-TOP-WLD-CARGO
KLM-2008-TOPWLD6MTHSRPK
KLM-2008-WLD-TOP-RPK
KLM-2009-04 90 YRS
KLM-2009-11 BIOFUEL
KLM-2010-04-VOLCANIC ERUPTION
KLM-2010-08-WLD RPK-2009
KLM-2010-11-SPACE FLIGHT
KLM-2011-01-2010 WORLD TOP TRAFFIC
KLM-2011-01-EUROPEAN MERGERS
KLM-2011-06-DELFT BLUE 777
KLM-2011-09 - 787-9 ORDER
KLM-2012-03 - KLM ASIA 777
KLM-2013-03 - NEW 747-400 WORLD C CLASS
KLM-2013-05 - WORLD C CLASS
KLM-2013-08 - TOP 12 ROUTES
KLM-2014-05-A330-200 BIOFUEL FLIGHT
KLM-2014-10 - LAST MD-11 FLIGHT
KLM-2014-10 - MD-11 FAREWELL-A
KLM-2014-10 - MD-11 FAREWELL-B
KLM-2014-10 - MD-11 FAREWELL-C
KLM-2014-10 - MD-11 FAREWELL-D
KLM-2014-10 - MD-11 FAREWELL-E
KLM-2014-10 - MD-11 FAREWELL-F
KLM-2014-10 - MD-11 FAREWELL-G
KLM-2014-10 - MD-11 FAREWELL-H
KLM-2014-10 - MD-11 FAREWELL-I
KLM-2014-10 - MD-11 FAREWELL-J
KLM-2014-10 - MD-11 FAREWELL-K
KLM-2014-10 - MD-11 FAREWELL-L
KLM-2014-10 - MD-11 FAREWELL-M
KLM-2015-04 - TOP 25 WORLD TRAFFIC.jpg
KLM-2015-05 - Edmonton - Amsterdam.jpg
KLM-2015-07 - 787-9 - World Business Class-A.jpg
KLM-2015-07 - 787-9 World Business Class.jpg
KLM-2015-11 - 1st 787-9.jpg
KLM-2015-11 - 787-9 1st Dreamliner.jpg
KLM-2016-03 - AMS Schipol Expansion.jpg
KLM-AIRPORT AMS LOUNGE
KLM-BUSINESS CLASS - 2014-08
KLM-CABIN ATTENDANTS - 2010-03 - NEW UNIFORMS
KLM-LOGO
KLM-LOGO TAIL
KLM-MAINTENANCE MRO-2006-08
KLM-MAINTENANCE MRO-INDUSTRY PROFILE-2012-01
KLM-MAP
KLM-SKYTEAM ALLIANCE-2004
KLM-VISIT AMSTERDAM
KLM-VISIT AMSTERDAM - 2012-11
KLM-VISIT AMSTERDAM - 2014-12
KLM-VISIT AMSTERDAM CANALS
KLM-VISIT KEUKENHOF TULIPS

FOUNDED IN 1919 AND STARTED OPERATIONS IN 1920. A K A KONINKLIJHE LUCHTVAART MAATSCHAPPIJ. THE WORLD'S OLDEST OPERATOR. NATIONAL AIRLINE. DOMESTIC, REGIONAL, & INTERNATIONAL, SCHEDULED, PASSENGER & CARGO, JET AIRPLANE SERVICES.

ADDRESS:
PO BOX 7700
NL-1117 ZL-SCHIPHOL-OOST, NETHERLANDS

The Kingdom of the Netherlands was established in 1581, it covers an area of 41,473 sq km, its population is 15.5 million, its capital is Amsterdam, and its official language is Dutch.

APRIL 1993: OWNS NORTHWEST (NWA) 20% ($400 MILLION IN 1989), KLM UK (AUK) 14.9% (TO 45% IN 3/95), MARTINAIR (MTH) 29.6% (TO 50% IN 3/95), TRANSAVIA (TAV) 80%, AND (LTR) 35% (REGIONAL CARRIER).

737-305 (CFM56-3B1) (PP875) & 747 (RT535).

NOVEMBER 1993: CONSORTIUM WITH AUSTRIAN (AUL), SCANDINAVIAN (SAS), & SWISSAIR (SWS) CALLED "ALCAZAR" FELL THROUGH.

DOES CONTRACT MAINTENANCE FOR (UPS) 747, SECTION 41, & SAUDI (SVA) (TCAS) INSTALLATION.

DECEMBER 1993: 1ST 737 (PP861) "D" MAINTENANCE CHECK. 1ST MD-11 DELIVERY.

JANUARY 1994: 1993 = +$55.8 MILLION. LAST 6 MONTHS = +17% PASSENGERS.

MARCH 1994: 737-400 "SIR HENRY STANLEY" & MD-11 DELIVERIES.

JULY 1994: DEFERRED INDEFINITELY 2 ORDERS 747-400F'S.

DECEMBER 1994: BOUGHT FOSTERS (AUSTRALIAN BREWERY) FOR 25% STAKE IN (NWA).

1 MD-11 (CF6-80C2D1F) (5TH IN 1994).

JANUARY 1995: 1994 = 72.4% LF (2ND HIGHEST IN EUROPE), (70.8% LF), +18.2% PAX.

29,819 EMPLOYEES (INCLUDING 1,424 FLIGHT CREW (FC), 4,743 CABIN ATTENDANTS (CA), 4,281 MAINTENANCE TECHNICIANS (MT)).

FEBRUARY 1995: 4/3 ORDERS (7/95) 767-306ER'S (CF6-80C2B4) (VL891 - 4), (ILF) LEASED, 223 PAX, 2 CLASS.

MARCH 1995: INCREASED OWNERSHIP IN MARTINAIR (MTH) TO 50%, & IN (KLM) UK (AUK) TO 45%.

APRIL 1995: FISCAL YEAR (FY) 1994 = +$295 MILLION (+$65.6 MILLION). SINCE 1991 = +57% PRODUCTIVITY & -20% UNIT COST.

2 747-200F'S, ATLAS (TLS) WET-LEASED.

MAY 1995: 1 MD-11 DELIVERY (4TH IN 12 MONTHS).

JUNE 1995: $340 MILLION, 2 ORDERS (/96) 747-400'S COMBIS, & 3 ORDERS 767-300ER'S, (ILF) LEASED.

JULY 1995: 1ST 6 MONTHS = +$276 MILLION (+$301 MILLION).

SEPTEMBER 1995: PETER SOMERS, DIRECTOR ENGINEERING & MAINTENANCE, VISITS BOEING EVERETT FOR 767-306ER (VL893) DELIVERY DISCUSSIONS.

OCTOBER 1995: 1ST 6 MONTHS = +$276.5 MILLION (-8.2%), DUE TO UNHEALTHY EXCHANGE RATES, DESPITE HI TRAFFIC BOOST. 3RD QUARTER = +$191.1 MILLION (-14.7).

NEW 747-200F ROUTE TO DUBAI, & MADRAS, OPERATED BY (TLS). PLANS TO ADD TASHKENT, WITH 767'S.

DECEMBER 1995: TAKES 26% STAKE IN KENYA AIRLINES (KEN).

NEW ROUTES TO LUSAKA, SURABAYA, BEIJING, & DENPASAR, BALI.

4 ORDERS (4/96) 737-400'S, KLM UK (AUK) LEASED (24231; 24233; 24813; 24814).

JANUARY 1996: LAST QUARTER = +$61.4 MILLION (+23%), DUE TO REVALUATION OF STAKE IN NORTHWEST (NWA).

+2 ORDERS 747-400'S COMBI ($300M) (1997). TO CONVERT 2 747-300'S TO FREIGHTERS.

FEBRUARY 1996: PETER HARTMAN, REPLACES ROLF VAN GROENEWOUD, SENIOR VP ENGINEERING & MAINTENANCE (WHO LEFT THE COMPANY).

MARCH 1996: TO SEOUL (747 COMBI).

DELIVERY OF 767-300ER (BOEING'S 8,000TH COMMERCIAL JET), (ILF) LEASED.

APRIL 1996: SINCE ROMANIA HAS POPULATION OF 23 MILLION, STARTS NEW ROUTE TO BUCHAREST (737-300). ALSO, TO MANILA, HONG KONG, SEOUL, JOHANNESBURG, CAPE TOWN, WARSAW, PRAGUE, BUDAPEST, TURIN, ATHENS & ISTANBUL. CODE SHARE WITH (ANS), SYDNEY, MELBOURNE, BRISBANE & CANBERRA. TO ABIDJAN (767).

CONTRACT MAINTENANCE FOR CATHAY (CAT), (UPS), ATLAS (TLS), MARTINAIR (MTH), & CORSAIR (COR).

4 737-400'S, KLM UK (AUK) LEASED, FLS AEROSPACE (ATD) MAINTENANCE.

(http://www.klm.nl).

FISCAL YEAR 1995 = +$319.8 MILLION (+16%): +10% RPK (TRAFFIC), +13% ASK (CAPACITY), 72.4% LF (LOAD FACTOR).

MAY 1996: CODE SHARE WITH NORTHWEST (NWA), AMSTERDAM TO MOSCOW & ST PETERSBURG.

26,030 EMPLOYEES (INCLUDING 6,961 FLIGHT CREW (FC) & 4,000 MAINTENANCE TECHNICIANS (MT).

JUNE 1996: APPLIED FOR ROUTE TO SHANGHAI. 1ST 747-400 OPS TO BEIJING.

SOLD 6 F 100'S TO (AUK). +7 ORDERS F 70'S, TO 4 ALREADY ORDERED (3 RECEIVED), TO KEEP FOKKER PRODUCTION LINE GOING FOR ONE MORE YEAR. +2 ORDERS (9/97) 737-300'S. OPERATING 4 737-400'S, (AUK), 3 YEAR LEASED. 1 767-300ER DELIVERY.

JULY 1996: SABENA TECHNIK, MAINTENANCE CONTRACT, FOR 2 737 "D" CHECKS, + OPTION FOR +4 737'S "D" CHECKS, IN /97. "D" CHECK, EVERY 8 YEARS, OR >16,000 FLIGHT HOURS = 12 - 20,000 HOURS OF WORK.

AUGUST 1996: 767-300 (PH-BZG) DELIVERY. 7TH 767 (VL897) DELIVERY. 6 ORDERS F 70'S (TAY 620-15).

OCTOBER 1996: NEW ROUTES TO SAN JUAN, PUERTO RICA (MD-11), BOLOGNA (F 70), AND BAKU (767). CODE SHARE WITH (NWA), TO NEWARK (DC-10).

1ST 767 "C" CHECK (VL891 = 4980 HOURS, 1719 CYCLES). LAST A310 FLIGHT, THEN TO GERMANY FOR FREIGHTER CONVERSION. 747-400 (RT012) DELIVERY. 1 747-400C DELIVERY. 1 767-300ER (CF6-80C2B1F) & 2 F 70'S (TAY 620-15) DELIVERIES.

NOVEMBER 1996: LAST 6 MONTHS = +$312 MILLION: +6.8% (RPK), 74% LF (-.2)

OFFERS TO BUY 38.2% STAKE, OWNED BY GOVERNMENT (WORTH >$750 MILLION).

COMPLETED 1ST 767 "C" CHECK.

SCHIPOL AIRPORT NOISE RESTRICTIONS, STIPULATES NO NEW FREQUENCIES, NOR NEW SERVICES OF ANY 707, 727, 737-100/-200, DC-8, DC-9, TU-134, OR BAC 111, AND LANDING FEES WERE INCREASED 100%.

(MOU) FOR JOINT OPERATIONS WITH (ALM), HOLLAND TO NETHERLAND ANTILLES, IN 4/97.

(UPS) 747 MAINTENANCE CONTRACT IS EXTENDED. NOW CONTRACT MAINTENANCE = 40% (KLM) REVENUES, 60% (KLM).

PETER SOMMERS, DIRECTOR 737 MAINTENANCE, REPLACING JAAP POT. ALSO RESPONSIBLE FOR F 100'S.

DECEMBER 1996: CODE SHARE WITH (NWA) (DC-10) & KLM (747), TO DELHI AND MUMBAI. IN APRIL, TO ABIDJAN, IVORY COAST & TO NAGOYA, VIA SAPPORO, ONCE RUSSIA OK'S FLIGHTS OVER SIBERIA.

JANUARY 1997: GOVERNMENT REDUCES SHARES FROM 38.2% TO 25%, BY SELLING $569 SHARES BACK TO (KLM).

LAST QUARTER = -$4 MILLION (+$55 MILLION), DUE TO -$48 MILLION FOR (NWA) INVESTMENT, HIGHER FUEL COSTS: 30.48 BILLION (RPK) TRAFFIC (#13 HIGHEST IN WORLD) (+7%), +5% ASK, 73.2% LF (+1.1).

(NWA) CODE SHARE TO WARSAW.

FEBRUARY 1997: $200 MILLION, 4 ORDERS (6/99) 737-800'S, 147 PAX, 2 CLASS. 767-300ER + 1 F 70 DELIVERIES.

MARCH 1997: FY 1996 = $81 MILLION (LOWER THAN /95): +11% (RPK), +8% (ASK), 73% LF (+.6).

RENEWED CONTRACT, FOR ATLAS (TLS) 747-200F FOR +2 YEARS TO CHICAGO (ORD).

MAINTENANCE CONTRACT TO PEMCO, COPENHAGEN, FOR 7 737-400'S.

DECIDED ON $53 MILLION UPGRADE OF 747-200'S & 747-300'S, TO REDUCE MAINTENANCE COSTS: REPLACEMENT OF MECHANICAL FUEL GAUGES WITH -400 DIGITAL TYPES, NEW (CM) SYSTEM, NEW FLIGHT MANAGEMENT SYSTEM (GPS/INERTIAL NAVIGATION), (ACARS), SMITHS INDUSTRIES (LCD'S), WITH CABIN ENHANCEMENTS & AGING AIRPLANE MODS.

TO TAKE 7 737-400'S (23865; 24231; 24232; 24344; 24468; 24813; & 24814), EX-(AUK), IN EXCHANGE FOR 6 F 100'S.

APRIL 1997: TO CONVERT 2 747-200'S TO FREIGHTER AT BOEING WICHITA, $40.8 MILLION CONTRACT, 35 TONS TO 100 CAPACITY.

1 MD-11 (48564) DELIVERY.

MAY 1997: PIETER BOUW, PRESIDENT RESIGNS (AFTER 30 YEARS), TO BE REPLACED BY LEO VAN WIJK IN AUGUST. PETER HARTMAN, MANAGING DIRECTOR.

FISCAL YEAR 1996 = +$123 MILLION (-57%), INCLUDING $269 MILLION FROM SALE OF STOCK IN (NWA), AND -$151 ON "FOCUS 2000" RESTRUCTURING PROGRAM.

13TH 747-400C DELIVERY, +1 MORE THIS YEAR.

JUNE 1997: STUDY UNDERTAKEN TO DETERMINE WHETHER APPLYING (ETOPS) MAINTENANCE PRINCIPLES TO THE 747-400, IS A COST EFFECTIVE WAY TO IMPROVE DISPATCH RELIABILITY.

1 737-400, EX-(AUK) DELIVERY. 10TH 767-300ER DELIVERY, LAST (ILF) LEASED.

JULY 1997: BUYS REMAINING 55% STAKE IN AIR UK (AUK), FROM BRITISH AIR TRANSPORT HOLDINGS, FOR FULL 100%. AIR UK 1996 = 3.6 MILLION PAX, WITH 5 F27'S, 9 F 50'S, 12 F 100'S, 1 B AE 146-100, & 10 B AE 146-300'S.

767 180 MINUTES (ETOPS) FLIGHTS/MONTH: 112 OVER ASIA/AFRICA AND 35 OVER NORTH ATLANTIC.

AUGUST 1997: BUYS 30% OF BRAATHENS (BRT).

NEW AIRSPACE OVER RUSSIA, DIRECT TO SAPPORO AND NAGOYA, JAPAN (747-400, 424 PAX).

6TH WIDE BODY MAINTENANCE BAY IN HANGAR 11.

SEPTEMBER 1997: CARGO OPERATIONS BY ATLAS (TLS), TO BOLOGNA.

(EC) OK'S (KLM)'S FULL CONTROL OF (AUK).

OCTOBER 1997: 26,358 EMPLOYEES.

ACQUIRED BRAATHENS (BRT), FOR $106 MILLION (30%). BRAATHEN'S FAMILY'S STAKE REDUCED FROM 68.8%, TO 38.8%.

767 180 MINUTES (ETOPS) FLIGHTS/MONTH: 121 ASIA/AFRICA, & 85 NORTH ATLANTIC.

DECEMBER 1997: 14TH JOINT (NWA)/(KLM) SERVICE, USA (PHILADELPHIA) TO AMSTERDAM.

(KLM) CITYHOPPER, TO OPERATE ONLY FOKKERS, BY OCTOBER 1998, WITH +3 F 50'S & +2 F 70'S IN 1ST Q 1998, FOR 13 F 50'S, & 12 F 70'S. 6 OF 11 SAAB 340B'S SOLD TO MEXICAN REGIONAL OPERATOR, AERO-LITTORAL. 5 FOR SALE.

"D" CHECK, ENGINE STRUT MODIFICATION ON MARTINAIR (MTH) 747-200F (RR310).

JANUARY 1998: SCHIPHOL AIRPORT IN 1998 NOISE LIMITATIONS, TO CAP LANDINGS/TAKEOFFS TO 360,000, EVEN THOUGH THERE IS A PROJECTED DEMAND OF 400,000K. CAP ALSO INCLUDES 44 MILLION PASSENGERS. DUTCH AIRLINES VIEW THIS AS A THREAT TO THEIR GROWTH.

ALLIANCE WITH ALITALIA (ALI) THROUGH MULTI-HUB SYSTEM. PLANS ALLIANCE WITH MALAYSIA (MAS) TO KUALA LUMPUR AND LINKS TO AUSTRALIA.

REACTING TO BRITISH AIRWAYS (BAB)'S "OPERATION BLUE SKY," (KLM) CONSIDERS LOW-COST SUBSIDIARY OPERATION.

FEBRUARY 1998: ACQUIRES REMAINING 50% STAKE IN MARTINAIR (MTH) FROM DUTCH INSURANCE GROUP, ROYAL NEDLLOYD FOR FULL 100% CONTROL. TO SELL REMAINING 16.8% BACK TO NORTHWEST (NWA), FOR $775 MILLION, BY MAY.

"INSTITUTE OF TRANSPORT MANAGEMENT" UK, NAMES (KLM) CARGO "1997 EUROPEAN CARGO AIRLINE OF THE YEAR."

MARCH 1998: "D" CHECK MAINTENANCE CONTRACT, INCLUDING MAJOR MODIFICATIONS TO (MAS) FOR DC-10-30, LEASED TO AFRICAN SAFARI AIRWAYS (AFS).

PETER SOMERS, DIRECTOR (CF6) POWERPLANT SERVICES; LEO VAN RIJN, DIRECTOR 737/F 100 MAINTENANCE; CEES DE JONG, DIRECTOR LINE MAINTENANCE; J OPDAM, INTERIM DIRECTOR 767/DC-10/MD-11/A310 MAINTENANCE.

1 ORDER (MARCH 1999) 767-300ER (CF6-80C2B4) (28884), (ILF) LEASED, 11TH.

APRIL 1998: FISCAL YEAR 1997 = +8% (RPK), +5% (ASK), 77.8% LF (+1.8).

26,030 EMPLOYEES (INCLUDING 6,961 FLIGHT CREW (FC) & 4,000 MAINTENANCE TECHNICIANS )MT).

+4 ORDERS 737-800'S, FOR TOTAL 8.

MAY 1998: (KLM)/(NWA) SEATTLE - AMSTERDAM (DC-10). PHILADELPHIA TO AMSTERDAM (DC-10).

"D" CHECK, ON (ALI) 747-200 TO TAKE 6 WEEKS, INCLUDING STRUT MODIFICATION & SECTION 41 WORK.

1997 FISCAL YEAR = +$1.1 BILLION (X9) DUE TO +$796 MILLION FROM STOCK SALE TO (NWA): +8% (RPK), +5% (ASK), 77.9% LF (+1.9). LAST QUARTER = -$30.8 MILLION.

JULY 1998: CODE SHARE WITH (MAS), TO KUALA LUMPUR. CODE SHARE WITH (CSA), TO PRAGUE.

(KLM) CARGO FORMS STRATEGIC ALLIANCE WITH EAST ASIATIC CO (EAC), BEIJING, FOR PROVISION OF LOGISTIC SERVICES IN CHINA. (KLM) CARGO, ADDS TEL AVIV, ISTANBUL, HELSINKI.

KLM = 26,923 EMPLOYEES (26,385). KLM GROUP = 34,953 EMPLOYEES (31,912).

1997 TOP WORLD AIRLINES COMPARISON:
EMPLOYEES (K): 10 AFA 36; 11 QAN 30; 12 SIA 28; 13 KLM 27; 14 SWA 25; 15 TWA 25; 16 SVA 24.8.

NET ($ MILLION): 9 DLH 482 (371); 10 CAL 395 (319); 11 SWA 318 (207 12 AFA 314 (-28); 13 ACN 308 (109); 14 KLM 303 (-33); 15 SAS 283 (265); 16 ALI 256 (-780); 17 CINTRA 244 (273).

(RPK) TRAFFIC (BILLION): 6 JAL 77; 7 CAL 77; 8 DLH 71; 9 AFA 70; 10 USA 67; 11 QAN 59; 12 KLM 55.42; 13 SIA 55.39; 14 ANA 51; 15 SWA 46.

PASSENGERS (PAX) (MILLION): 16 QAN 19; 17 AMW 18; 18 JAS 17; 19 IBE 15; 20 GUN 15; 21 TII 15; 22 KLM 14.5; 23 ACN 14.0; 24 ANS 13.

(FTK) FREIGHT TRAFFIC (BILLION): 1 FED 9.3; 2 GRC 6.5; 3 KAL 5.7; 4 UPS 5.4; 5 AFA 5.0; 6 SIA 4.8; 7 JAL 4.2; 8 BAB 3.9; 9 KLM 3.7; 10 CAT 3.6.

IN EUROPE 1997 COMPARISON:
EMPLOYEES (1,000): 1 DLH 58; 2 BAB 53 (+2%); 3 AFA 36 (+19%); 4 KLM 27; 5 SAS 23 (+19%); 6 IBE 21 (-1.2%).

(RPK) (BILLION): 1 BAB 106 (+5.1%); 2 DLH 71 (+12.8%); 3 AFA 70 (+21.85); 4 KLM 55 (+13.4%); 5 ALI 36 (+4.2%); 6 IBE 28 (+6%).

(FTK) (BILLION): 1 GRC 6.2 (+2.4%); 2 AFA 4.9 (+5.5%); 3 BAB 3.9 (+12%); 4 KLM 3.7 (+.8%); 5 SWS 1.8 (+12.8%); 6 ALI 1.8 (-1%).

PURCHASES 12.3% SHARES FROM NETHERLANDS GOVT.

LAST QUARTER (2ND) = +$106 MILLION, INCLUDING SALE $23.5 MILLION OF 26% STAKE IN FRAN MAAS NV.

(KLM) = 27,039 EMPLOYEES (26,620). (KLM) GROUP = 35,666 EMPLOYEES (34,804).

(ETOPS) 180 MINUTES FLIGHTS/MONTH (TOTAL): 10 767 = 132 (2,512) ASIA,
AFRICA, & 46 (1,652) NORTH ATLANTIC.

AUGUST 1998: TO DOHA, QATAR (767) IN OCTOBER.

SEPTEMBER 1998: NEW FREIGHTER ROUTES TO HELSINKI, ISTANBUL, KIEV, & TEL AVIV (L-100), OPERATIONS BY SCHREINER AIRWAYS (SCH).

FARNBOROUGH SHOW ANNOUNCEMENT, OF 1ST EUROPEAN CUSTOMER, FOR 4 ORDERS (/01) 737-900'S ((ASA), (CAL) & (KAL) WERE PREVIOUS ORDERS), 170 PAX.

SEPTEMBER 1998: (KLM) CARGO TO RUN NEW BOEING SPARES DISTRIBUTION CENTER AT SCHIPHOL AIRPORT, AMSTERDAM.

(KLM) ENGINEERING & MAINTENANCE, COOPERATIVE MAINTENANCE CONTRACT, WITH CHINA AVIATION SUPPLY CORPORATION (CASC), INCLUDING CHINESE AIRLINES, WITH 150 AIRPLANES & POTENTIAL OF 75 GE (CF6) ENGINES.

"AVIATION WEEK" MAGAZINE HONORS (KLM) AS WORLD'S "BEST-MANAGED MAJOR AIRLINE."

9TH MD-11 (PH-KCI) RETURNED FROM 3 YEAR LEASE TO VASP (VSP).

OCTOBER 1998: "FORTUNE" MAGAZINE NAMES (KLM) "WORLD'S MOST ADMIRED AIRLINE," 2ND AMERICAN AIRLINES (AAL), FOLLOWED BY SOUTHWEST AIRLINES (SWA), LUFTHANSA (DLH)/SINGAPORE AIRLINES (SIA).

ALLIANCE PACT WITH EUROWINGS (RFG) EXPANDED, INCLUDING CODE SHARE WITH (NWA).

10 767'S (ETOPS) 180 MINUTES FLIGHTS/MONTH (TOTAL FLIGHTS) = ASIA, AFRICA 130 (2,702); & NORTH ATLANTIC 60 (1,832).

NOVEMBER 1998: 1ST 6 MONTHS FISCAL YEAR 1998 = +$306 MILLION (REFLECTS TAKEOVER OF MARTINAIR (MTH), WEAK ASIAN MARKETS, & (NWA) PILOT'S STRIKE): +1% RPK, +5% ASK, 75.7% LF (-3.4). ASIA REGION: +1% RPK, +6% ASK, 78.2% LF (-4).

JOINT CARGO OPERATIONS WITH ALITALIA (ALI) TO 16 DESTINATIONS IN EUROPE, MIDDLE EAST, ASIA, & LATIN AMERICA.

DECEMBER 1998: AS PART OF ALLIANCE WITH ALITALIA (ALI), NEW WEBSITE (www.oneticket.com) FOR "ONE TICKET TO THE WORLD" TO BLEND "DUTCH PRAGMATISM WITH ITALIAN WARMTH."

JANUARY 1999: 1998 = 35.64 BILLION (RPK) (34.42B); 46.01 BILLION (ASK) (43.8 BILLION); 77.5% LF (-1.1). 1998 CITYHOPPER = 1.95 MILLION PAX. LAST QUARTER = -$15 MILLION: 75.1% LF (-2.4); +3% (ASK), -2% (FTK), DUE TO 40% OF CARGO NETWORK IN ASIA.

IN 3/99 TO SHANGHAI (747-400 COMBI, 277 PAX & 35 TONS CARGO) TO PIGGYBACK ON EXISTING HONG KONG/BEIJING.

(LOI) FOR JOINT VENTURE WITH HAMILTON STD (51%) FOR PNEUMATIC COMPONENTS REPAIR & OVERHAUL, SERVING EUROPEAN, MIDDLE EASTERN, AND AFRICAN COUNTRIES AIRLINES, TO EMPLOY 50 IN 2000.

FEBRUARY 1999: (EC) TURNS DOWN APPROVAL OF (KLM)'S ACQUISITION OF ROYAL NEDLLOYD'S 50%, STAKE IN MARTINAIR (MTH).

1998 TOP WORLD AIRLINES COMPARISONS:
TRAFFIC (RPK) (BILLIOJN): 5 BAB 117.5; 6 CAL 93.4; 7 AFA 83.7
8 JAL 82.9; 9 DLH 81.4; 10 USA 66.9; 11 SIA 64.5; 12 KLM
58.9; 13 SWA 58.7; 14 QAN 58.1; 15 ANA 56.7.

NET PROFIT ($ MILLION): 1 DAL 1,285; 2 UAL 1,235; 3 AMR 985; 4 SIA 737; 5 DLH 633; 6 SWA 474; 7 CAL 455; 8 FED 442; 9 AFA 340; 10 KLM 324.

EMPLOYEES (1,000): 13 IBE 29.1; 14 SWA 27.7; 15 SIA 27.4; 16 KLM 27.3;
17 SAS 25.8; 18 TII 24.1; 19 QAN 23.4; 20 ACN 23.

(FTK) FREIGHT TRAFFIC (BILLION): 1 FED 10.31; 2 LUB 7.07; 3 UPS 6.02; 4 KAL 5.96; 5 SIA 5.48; 6 AFA 4.73; 7 BAB 4.54; 8 JAL 4.42; 9 KLM 4.15; 10 CAT 3.77.

1ST 737-800 DELIVERY, (KLM)'S 80TH BOEING AIRPLANE. 11TH 767-300R DELIVERY.

MARCH 1999: (KLM) ENGINEERING & MAINTENANCE CONTRACT TO CANADIAN MARCONI FOR COMPREHENSIVE 747 AVIONIC UPGRADE (STC) TO EXTEND LIFE OF 13 747-200/-300'S FLEET, INCLUDING (CMA-900) FLIGHT MANAGEMENT SYSTEM, WITH 12-CHANNEL (GPS) SENSORS, INTEGRATED WITH LATEST INERTIAL REFERENCE SYSTEM, & SPECIAL INTERFACES TO THE AUTOPILOT & OTHER AVIONIC SYSTEMS BY SMITHS INDUSTRIES AND HOLLINGSTEAD INTERNATIONAL. (KLM) & MARCONI, WILL MARKET THE UPGRADE, & MODIFICATION CAN BE TAILORED TO 727, DC-9, DC-10, AND A300 AIRPLANES.

+5 ORDERS 737-800'S, +4 ORDERS 747-400'S, AND +1 767-300ER, (ILF) LEASED (/00).

APRIL 1999: 26,811 EMPLOYEES (INCLUDING 2,000 FLIGHT CREW (FC), 7,000 CABIN ATTENDANTS (CA), & 4,500 MAINTENANCE TECHNICIANS (MT)).

IN JUNE, TO CANCEL SANA'A, YEMEN, & START TO RIYADH, SAUDI ARABIA.

1998 WORLD AIRLINES TRAFFIC (RPK) (BILLIONS):
1 UAL 200 (195); 2 AAL 175 (172); 3 DAL 166 (160); 4 BAB 117 (106); 5 NWA 107 (116); 6 CAL 87 (77); 7 DLH 72 (71); 8 USA 67 (66); 9 SIA 58 (55); 10 KLM 57 (55); 11 SWA 51 (46); 12 ANA 45 (51).

MAY 1999: 1ST QUARTER = +$221 MILLION (-24.4%).

DROPS BID TO TAKE OVER REMAINING 50% OF MARTINAIR (MTH).

JUNE 1999: (KLM) EXEL 3/2 ORDERS EMBRAER EMB-145'S.

1998 WORLD AIRLINES TRAFFIC (RPM) (BILLIONS):
1. UAL 124.54; 2. AAL 108.87; 3. DAL 103.24; 4. BAB 72.08; 5. NWA
66.71; 6. CAL 50.94; 7. JAL 48.97; 8. DLH 46.88; 9. AFA 46.35; 10. USA 41.25; 11. SIA 35.88; 12. KLM 35.59; 13. QAN 35.22; 14. ANA 33.38; 15. SWA 31.43; 16. CAT 25.26.

JULY 1999: $5.3 MILLION 5 YEAR, CONTRACT TO OUTSOURCE WAREHOUSE, AND AIRPLANE HARDWARE ITEMS FOR MAINTENANCE FOR ITS 115 737'S, 747'S, & MD-11'S TO TRISTAR AEROSPACE, TEXAS.

AUGUST 1999: 2ND QUARTER = +$37.5 MILLION (-64%) DUE TO INDUSTRY EXCESS CAPACITY & INCREASING COMPETITION. 74.6% LF (FLAT). (KLM) GROUP FISCAL YEAR 1998 = +$213 MILLION (+$282 MILLION) (-24%): 57.28 BILLION (RPK) (+3.4%), 14.99 MILLION (PAX) (+3.8%), 77.4% LF (-1.2). KLM 1998 = +$221.4 MILLION (+$1 BILLION): 35.59 BILLION (RPM) (+3.4%), 6.58 BILLION (FTM) (+1.2%).

PLANS TO ADD HONDURAS TO THE 80 COUNTRIES IT SERVES AROUND THE WORLD. NEW TICKET OFFICE IN SAN PEDRO SULA ON CARIBBEAN COAST.

SEPTEMBER 1999: (KLM) ENGINEERING & MAINTENANCE HAS HANGARS FOR 10 WIDE BODIES & 11 NARROW BODIES AIRPLANES, "A" - "D" CHECKS FOR 737'S, 747'S, 767'S, DC-10'S, & MD-11'S, INCLUDING AVIONICS UPGRADES, 747 PYLON MODIFICATION, (CPCP), COMPOSITE REPAIRS, STRIP/PAINT, INTERIORS, VIP REFURBISHMENTS.

PLANS TO MERGE WITH ALITALIA (ALI). WITH ALLIANCE PARTNERS NORTHWEST (NWA) & ALITALIA (ALI), POSSIBLE STAKE, IN BRITISH MIDLAND (BMA) TO OCCUR. MAY ACQUIRE 40%, WHICH SCANDINAVIAN (SAS) HOLDS IN (BMA). (KLM) AND (ALI) WILL SPONSOR NEXT YEAR'S EURO 2000 SOCCER CHAMPIONSHIPS.

OCTOBER 1999: 80TH ANNIVESARY!

1ST 9 MONTHS = 43.71 BILLION (RPK) (SAME), 2.87 BILLION (FTK) (+5%), 11.60 MILLION PAX (+2%).

NOVEMBER 1999: OPENS NEW STATE-OF-THE-ART OPERATIONS CONTROL CENTER (OCC) FOR MAINTENANCE CONTROL, DUTY PILOTS, (AOG) DESK, ROUTE PLANNING, MOVEMENT CONTROL, MATERIAL, CABIN & FLIGHT CREW PLANNING, FLEET TECHNICAL DEPARTMENT, ETC, ALL CO-LOCATED.

DECEMBER 1999: (KLM), WITH TRANSAVIA (TAV) & BRAATHENS (BRT) CONTRACT, TO BOEING AIRPLANE SERVICES (BAS) FOR 737NG SPARES EXCHANGE PROGRAM (300 (LRU'S)/AIRPLANE), & SHIP REPLACEMENT PARTS, WITHIN 1 DAY OF ORDER.

1ST "C" CHECK ON TRANSAVIA (TAV) 737-800.

FEBRUARY 2000: 33,892 EMPLOYEES.

1 767-300ER WET-LEASED TO KENYA (KEN), TO REPLACE (KEN) A310 THAT CRASHED LAST MONTH. 767-306ER (781-30393, PH-BZO), (ILF) LEASED.

MARCH 2000: (KLM) ENGINEERING & MAINTENANCE HAS TOTAL MAINTENANCE SUPPORT CONTRACT FOR AIR NAMIBIA (NAM) 747-400.

PLANS TO ELIMINATE -2,700 JOBS, TO REDUCE TO 31,192 EMPLOYEES.

$100 MILLION INVESTMENT IN JOINT VENTURE WITH PRATT & WHITNEY (PRW) FOR MAINTENANCE SERVICES, FOR ENGINES, AND EVENTUALLY FOR WHOLE AIRPLANE. (KLM)'S EXISTING ENGINE OVERHAUL SHOP WILL BECOME PART OF NEW COMPANY. EXPECTS $1 BILLION BUSINESS IN 5 TO 6 YEARS.

APRIL 2000: POSSIBLE FULL MERGER WITH ALITALIA (ALI). HAS ALREADY GONE THROUGH "VIRTUAL" MERGER, WITH INTEGRATION OF MANY MANAGEMENT TEAMS. ITALIAN GOVERNMENT STILL OWNS 53% (ALI).

27,379 EMPLOYEES (INCLUDING 2,000 FLIGHT CREW (FC), 7,000 CABIN ATTENDANTS (CA), & 4,500 MAINTENANCE TECHNICIANS (MT)).

MAY 2000: CANCELS ITS COMPREHENSIVE PARTNERSHIP, WITH (ALI) DUE TO CONCERNS ABOUT MILAN MALPENSA HUB AND PRIVATIZATION PROGRESS OF ALITALIA (ALI).

FISCAL YEAR 1999 = +$305.7 MILLION (+63%): FROM ONE-TIME GAINS FROM SALE OF HOLDINGS IN COMPUTER RESERVATION SYSTEM, GALILEO, DATA NETWORK SERVICE PROVIDER EQUANT, & OTHERS, $107.4 MILLION FUEL COSTS (+22%), 76.7% LF (+1.6).

STILL PLANS TO LAY OFF 3,000 EMPLOYEES.

SITA CONTRACT FOR FULLY MANAGED GLOBAL IP NETWORK INFRASTRUCTURE TO ENABLE STAFF AT 300 SITES IN 160 COUNTRIES, TO ACCESS ALL OF ITS SYSTEMS (SIMILAR TO SITA CONTRACTS WITH BRITISH AIRWAYS (BAB), QANTAS (QAN), AND CATHAY (CAT).

JULY 2000: ADDED 2ND 737 MAINTENANCE LINE AT SCHIPHOL EAST FOR "D" CHECKS & POSSIBLE 3RD. COMPLETED 1ST 737-300 (27420) & PLANS ABOUT 7 "D" CHECKS/YEAR, FOR (KLM) & TRANSAVIA (TAV) & IS BOOKED THROUGH 2004.

27,302 EMPLOYEES.

1999 TOP WORLD AIRLINES COMPARISONS:
TRAFFIC (RPK) (BILLION): 7 AFA 83.7; 8 JAL 83.9; 9 DLH 81.4; 10 USA 66.9; 11 SIA 64.5; 12 KLM 58.9; 13 SWA 58.7.

NET PROFIT ($ MILLION): 1 DAL 1,285; 2 UAL 1,235; 3 AMR 985; 4 SIA 737; 5 DLH 633; 6 SWA 474; 7 CAL 455; 8 FED 442; 9 AFA 340; 10
KLM 324; 11 NWA 300; 12 CAT 282; 13 QAN 279.

EMPLOYEES (1,000): 13 IBE 29.1; 14 SWA 27.7; 15 SIA 27.4; 16 KLM 27.3; 17 SAS 25.8.

(FTK) FREIGHT TRAFFIC (BILLION): 1 FED 10.31; 2 LUB 7.07; 3 UPS 6.02; 4 KAL 5.96; 5 SIA 5.48; 6 BAB 4.54; 7 BAB 4.54; 8 JAL 4.42; 9 KLM 4.15; 10 CAT 3.77L 11 UAL 3.58; 12 CHI 3.38; 13 CLX 3.25; 14 EVA 3.15

2ND QUARTER = +$40.51 MILLION (+23%).

AUGUST 2000: (KLM) GROUP FISCAL YEAR 1999 = +$324.02 MILLION (+$198.86: 58.9 BILLION (RPK) (+2.7%); 77.4% LF; 4.15 BILLION (FTK) (+6.8%); 27,302 EMPLOYEES (+5.8).

JOINS E-COMMERCE VENTURE CALLED "AEROEXCHANGE" FOR AIRPLANE PARTS, MAINTENANCE SERVICES, & GENERAL SUPPLIES WITH 12 AIRLINES: (CAT); (DLH); (SIA); (FED); (NWA); (ACN); (ANA); (AMW); (SAS); (AUL), & (ANZ).

SEPTEMBER 2000: 1ST 6 MONTHS = 28.94 BILLION (RPK) (+6.4%); 3.05 BILLION (FTK) (+10.6%).

JOINT VENTURE WITH UNITED TECHNOLOGIES FOR NOSE-TO-TAIL AIRPLANE MAINTENANCE IS GOING WELL AND HAS EXPANDED IN SCOPE.

1OCTOBER 2000: TO NEWARK. IN APRIL, CODE SHARE WITH (NWA) TO MIAMI (DC-10-30). IN JANUARY, TO LISBON (NONSTOP, 2/DAY). CODE SHARE WITH MALAYSIAN (MAS), KUALA LUMPUR - ADELAIDE, AUCKLAND, BRISBANE, CAIRNS, MELBOURNE, PERTH, & SYDNEY.

28,358 EMPLOYEES (INCLUDING 1,828 FLIGHT CREW (FC), 5,676 CABIN ATTENDANTS (CA), & 5,358 MAINTENANCE TECHNICIANS (MT)) (+3.9%).

1ST 6 MONTHS TOP WORLD AIRLINES (RPK) (BILLIONS):
1 UAL 100.26; 2 AAL 92.41; 3 DAL 89.82; 4 NWA 62.13; 5 CAL 60.38;
6 USA 35.07; 7 SIA 33.79; 8 SWA 32.84; 9 KLM 28.94; 10 CAT
22.58; 11 TWA 21.26; 12 ACN 20.96; 13 KAL 19.47.

NOVEMBER 2000: 3RD QUARTER = +$99 MILLION (+71%): +77% FUEL COSTS, 84.5% LF.

FORMS JOINT CARGO, SALES & SERVICE COMPANY WITH KENYA (KEN) (60%) AND MARTINAIR (MTH) FOR AFRICA, FROM NAIROBI HUB, USING 15 - 40 TON FREIGHTERS, LATER BECOMING NEW CARGO AIRLINE.

DECEMBER 2000: FOLLOWING (FAA) FOREIGN REPAIR STATION AUDIT, RECERTIFIES ENGINEERING & MAINTENANCE FOR ANOTHER YEAR.

CODE SHARE WITH SABENA (SAB), TO BRUSSELS.

1ST 9 MONTHS = 45.91B RPK (+6.1%), 3.33B FTK (+15.4%).

WILL TAKE OVER ALL SERVICES TO GERMANY CURRENTLY OPERATED BY EUROWINGS (RFG). TO INCREASE CAPACITY TO SOUTH AFRICA BY REPLACING COMBI CONFIGURATION WITH +246 PAX.

TOP WORLD AIRLINES 1ST 9 MONTHS TRAFFIC (RPK) (BILLION):
7 AFA/DLH/JAL 67.38; 8 USA 56.07; 9 SIA 52.77; 10 SWA 50.48; 11 QAN 49.28; 12 KLM 45.91; 13 CAT 35.26; 14 TWA 33.56; 15 TII 31.26.

JANUARY 2001: CODE SHARE WITH MALEV (HGA) TO BUDAPEST (4/DAY).

4TH QUARTER = +$3.7 MILLION. 2000 = 37.88 BILLION (RPM) (+4%), +.9% (ASM), 79.7% LF (+2.4).

TOP WORLD AIRLINES 2000 TRAFFIC (RPM) (BILLION):
12 ACN 42.38; 13 SWA 42.23; 14 QAN 39.46; 15 KLM 37.49; 16 ANA 36.07; 17 CAT 29.27; 18 TII 26.25; 19 ALI 25.24; 20 KAL 25.15.

FEBRUARY 2001: IN JULY, 1ST AIRLINE IN EUROPE TO INTRODUCE THE 737-900, 178 PAX. WILL SERVE PARIS, MADRID, BARCELONA, LISBON, & ATHENS. WILL ADD MIAMI IN SUMMER.

MARCH 2001: TO BANGKOK - MANILA. RESUMES FLIGHTS TO TRIPOLI (737, 2/WEEK).

2000 = 60.72 BILLION RPK (+5.2%), 4.48 BILLION (FTK) (+12.5%).

APRIL 2001: 27,302 EMPLOYEES.

TO ACCRA (DAILY).

12 767-300'S "C"/"S4C" MAINTENANCE CONTRACT TO ALITALIA (ALI).

MAY 2001: RESUMES FLIGHTS TO BANGKOK - MANILA (747-400, 4/WEEK).

2000 FISCAL YEAR = +$67.66 MILLION.

JUNE 2001: (KLM) SIGNS UP AS MAINLAND EUROPE'S LAUNCH CUSTOMER FOR THE GLOBAL AIRLINE INVENTORY NETWORK (GAIN), A "VALUE-ADDED SERVICE IN WHICH BOEING (TBC) WILL MANAGE THE SUPPLY CHAIN FOR EXPENDABLE AIRFRAME SPARE PARTS."

1ST 737-9K2 DELIVERY.

JULY 2001: CODE SHARE WITH CHINA SOUTHERN (GUN) TO BEIJING, AND AMSTERDAM (747-400/777).

FISCAL YEAR 2000 = +EUR 19 MILLION (+EUR 24 MILLION).

AUGUST 2001: PLANS TO CUT CAPACITY BY 3% STARTING OCTOBER, BY TRIMMING FREQUENCIES, AND USING SMALLER AIRPLANES ON SOME ROUTES. WILL REPLACE 737-300/-400'S WITH 737-800/-900'S AND WILL PARK 1 747-300 & 1 747-300 COMBI.

2ND QUARTER = +$15.2 MILLION.

DECIDES TO ABANDON JOINT "NOSE-TO-TAIL" MAINTENANCE ALLIANCE WITH UNITED TECHNOLOGIES (SEE SEPTEMBER).

SEPTEMBER 2001: WILL CUT (ASK)'S CAPACITY BY -15%. TO CUT -2,500 JOBS.

OCTOBER 2001: TOP WORLD AIRLINES 1ST 9 MONTHS TRAFFIC (RPK) (B):
11 SWA 54.24; 12 SIA 53.02; 13 ACN 52.85; 14 KLM 45.30; 15 CAT 34.34; 16 MAS 27.98; 17 ALI 27.92; 18 KAL 27.24.

NOVEMBER 2001: CONTRACT WITH DUTCH TRAIN OPERATOR, NEDERLANDSE SPOORWEGEN (NS) WITH GOVERNMENT FOR OPERATING HIGH-SPEED, LINE TRAINS ON AMSTERDAM - PARIS. NEXT PHASE IS NEGOTIATING PARTNERSHIPS WITH THE BELGIAN AND FRENCH RAIL COMPANIES. THE 1ST HIGH-SPEED TRAINS ARE FORECASTED TO OPERATE ON THE LINE, IN SEPTEMBER 2006.

SELLS 30% STAKE IN BRAATHENS (BRT) FOR $30 MILLION TO (SAS), SO THAT (SAS) CAN TAKE FULL CONTROL OF (BRT).

DECEMBER 2001: BOEING (TBC) OPENS NEW GLOBAL AIRLINE INVENTORY NETWORK (GAIN) OPERATIONS CENTER AT (KLM)'S E&M FACILITY AT SCHIPHOL, TO MANAGE PURCHASING, INVENTORY, AND LOGISTICS OF 27,000 EXPENDABLE AIRFRAME PARTS FOR 737'S, 737NG'S, 747'S, 767'S, AND MD-11'S.

JANUARY 2002: LEO VAN WIJK, PRESIDENT & CEO, IS ELECTED CHAIRMAN OF ASSOCIATION OF EUROPEAN AIRLINES (AEA) FOR 2002, REPLACING JEAN-CYRIL SPINETTA, AIR FRANCE (AFA).

FORMS MARKETING AGREEMENT, WITH CONTINENTAL (CAL), AND HAS CODE SHARE, NEWARK-AMSTERDAM AND TO 35 EUROPEAN DESTINATIONS.

MAKES LONG-TERM STRATEGIC AGREEMENT WITH "ACCENTURE" TO DEVELOP AND MAINTAIN WEB-ENABLED INFORMATION TECHNOLOGY (IT) SYSTEMS.

2001 = 57.25 BILLION (RPK) (+1.1%); 4.09 BILLION (FTK) (-1.8%).

2001 TOP 50 WORLD AIRLINES - TRAFFIC (BILLION) (RPM):
1 UAL 116.60; 2 AAL 106.15; 3 DAL 97.60; 4 NWA 73.11; 5 BAB 64.24; 6 AFA 59.54; 7 CAL 58.76; 8 DLH 56.76; 9 JAL 50.77; 10 USA 45.93; 11 SWA 44.50; 12 SIA 42.76; 13 QAN 42.14; 14 ACN 41.49; 15 KLM 35.76; 16 ANA 33.16; 17 CAT 27.81; 18 TII 27.43; 19 IBE 25.64; 20 KAL 23.73; 21 ALI 22.45; 22 MAS 22.29; 23 AMW 19.06; 24 VAA 17.65; 25 VAR 16.02; 26 CHI 16.00; 27 EAD 14.37; 28 SAS 14.26; 29 ANZ 13.54; 30 SAA 12.70; 31 SVA 12.56; 32 BEJ 12.39; 33 ASA 12.23; 34 JAS 10.06; 35 THY 9.35; 36 AMX 8.51; 37 PAL 8.36; 38 GIA 8.15; 39 CMA 7.99; 40 ELA 7.79; 41 GUL 7.65; 42 PIA 7.24; 43 AIN 7.10; 44 TAP 6.43; 45 EGP 5.53; 46 OLY 5.24; 47 AUL 5.06; 48 FIN 4.93; 49 IND 4.52; 50 CQT 4.51.

FEBRUARY 2002: 4TH QUARTER = -$82 MILLION.

COMMERCIAL ALLIANCE WITH VOLARE (VLR).

MARCH 2002: TO INVEST EUR 75 MILLION IN REPLACEMENT OF CURRENT ENGINE OVERHAUL CENTER AT ITS TECHNICAL FACILITIES AT SCHIPOL AIRPORT WITH COMPLETION BY SUMMER 2004.

27,380 EMPLOYEES.

CARGO SERVICE TO ADDIS ABABA.

$2.1 BILLION, 3 ORDERS 747-400F'S, AND 8 ORDERS 777, TO REPLACE 12 OF ITS OLD WIDE BODY AIRPLANES (747-300'S). IN THE SECOND PHASE, (KLM) WILL REPLACE ITS 12 767-300ER'S & 10 MD-11'S WITH A COMBINATION OF 2 777-200ER'S AND 6/18 A330-200'S.

APRIL 2002: 30,253 EMPLOYEES.

MAIN BASE: AMSTERDAM SCHIPHOL (AMS).

6-YEAR, $176 MILLION, EXTENSION OF HEAVY MAINTENANCE CONTRACT FOR VIRGIN ATLANTIC (VAA) 12 747-400'S, INCLUDING AIRFRAME, ENGINE & COMPONENT MAINTENANCE, MODIFICATION PROGRAMS, CABIN ALTERATIONS AND REPAINTING.

MAY 2002: FISCAL YEAR 2001 = -EUR 156 MILLION/-$155 MILLION (+EUR 77 MILLION).

6/4 ORDERS (NOVEMBER 2003) 777-200ER'S, (ILF) 12 YEAR LEASED. WILL ALSO EXTEND LEASE OF 12 767-300ER'S FOR AN AVERAGE +2 YEARS. COMBINED CONTRACTS VALUED AT $1.5 BILLION.

June 2002: Plans to set up a new, no-frills, airline in October, made up from its two, existing low-cost cfarrier (LCC), subsidiary operations, by buzz (BZZ), and Basiq Air.

2001 Top World Airlines by Traffic (RPK) (Billion):
1 UAL 187.67; 2 AAL 170.88; 3 DAL 163.66; 4 NWA 117.66; 5 BAB 106.27; 6 CAL 98.37; 7 AFA 94.42; 8 DLH 86.70; 9 JAL 84.27; 10 USA 73.93; 11 SWA 71.59; 12 SIA 69.15; 13 QAN 67.89; 14 ACN 67.03; 15 KLM 57.85; 16 ANA 56.90; 17 CAT 44.79; 18 TII 44.04; 19 IBE 41.30; 20 KAL 38.45; 21 MAS 38.31; 22 ALI 36.52; 23 SWS 32.98; 24 TWA 31.85; 25 AMW 30.69.

2001 Top World Cargo Operators (Billion) (FTK):
1 FED 11.05; 2 LUB 7.08; 3 UPS 5.96; 4 SIA 5.88; 5 KAL 5.57; 6 AFA 5.12; 7 KLM 4.64; 8 JAL 4.19; 9 BAB 4.033; 10 CHI 4.030; 11 NCA 3.93; 12 CAT 3.89; 13 CLX 3.77; 14 EVA 3.28; 15 UAL 2.80; 16 NWA 2.79; 17 AAL 2.56; 18 MTH 2.40; 19 AAR 2.38; 20 DAL 2.31; 21 MAS 1.84; 22 SWS 1.79; 23 TII 1.67; 24 QAN 1.57; 25 AHK 1.55.

(KLM) 2001: -$137 Million (+$67.71 Million): 57.85 Billion (RPK) (-4.1%); 78.3% LF; 16.00 Million (PAX) (-1.5%); 4.46 Billion (FTK) +12.6%); 27,573 Employees (-2.2%).

July 2002: Code share with Air Europa (ARE) to 11 Spanish destinations, beyond (KLM)'s scheduled connections to Madrid and Barcelona.

At Farnborough Air Show, announces $344 Million, 2 orders 777-200ER's, and $780 Million, 6/18 orders A330-200's.

August 2002: Stavanger - Aberdeen (2/day).

Paints 4 737-800's & 4 747-400's fuselage with "www.klm.com - The World is Just a Click Away," plus a picture of the website's swan. Sells 7 737-400's and leases them back.

September 2002: (KLM) Cargo to Budapest (weekly), and Liege - Munich - Budapest (A300B4-200F, 2/week).

October 2002: Code share with TAM Brazil (TPR), Sao Paulo - Buenos Aires (TPR A330) to connect with (KLM)'s Amsterdam - Sao Paulo (6/week). In December, to Curacao (747-300, 5/week), and to Aruba (MD-11, 3/week). The daily flight to Lima has changed its stopover from Aruba, to Bonaire. Thus, also to Bonaire (MD-11, 2/day).

1st 6 months Top World Airlines Traffic (Billion) (RPK):
1 AAL 95.18; 2 UAL 84.56; 3 DAL 74.53; 4 NWA 56.50; 5 BAB 49.30; 6 AFA 48.21; 7 CAL 47.49; 8 DLH 42.06; 9 JAL 39.44; 10 SWA 36.03; 11 SIA 36.00; 12 ACN 33.69; 13 USA 33.06; 14 KLM 27.54; 15 CAT 23.07; 16 IBE 19.53; 17 KAL 16.47; 18 CHI 15.70; 19 AMW 15.20; 20 ALI 14.21; 21 EAD 13.45; 22 VAR 12.68; 23 GUN 12.49; 24 SAS 12.01; 25 BEJ 10.32.

November 2002: 3rd Quarter = +EUR 86 Million/+$86 Million (+218%) (+ EUR 46 Million): 80.2% LF (+3.4) (however, the unstable economic and geo-political environment will make it unlikely to achieve a +ve net income for the current fiscal year). 1st 9 months = 48.87 Billion (RPK) (-4.5%); 3.07 Billion (FTK) (-2.5%).

Launch orders for Boeing's hard-mounted Electronic Flight Bag (EFB) for 10 777's, including design, certification, & installation on 4 existing 777's. (EFB) comprises Jeppesen software, and Astronautics display harware. The (EFB) effectively replaces 35 kg/77 lb worth of airplane manuals, and presents data to the crew on 265 mm (10 inch) diagonal liquid crystal displays (LCD)s. In addition to manuals, the (EFB) can display live weather information, (NOTAM)s, navigation charts, taxi situation maps, airport familiarization maps, and pictures, customer-specific applications, and video surveillance of the cabin and approach area to the flight deck door. As well as improving runway situational awareness, the (EFB) includes weight & balance and performance calculators. This function alone could increase the payload of a 777 taking off from a wet runway by up to 9,000 kg.

1st 9 months Top World Airlines Traffic (RPK) Billion:
1 AAL 148.39; 2 UAL 132.89; 3 DAL 123.75; 4 NWA 88.26; 5 BAB 76.23; 6 AFA 74.00; 7 CAL 73.12; 8 DLH 67.07; 9 SIA 55.60; 10 SWA 55.20; 11 JAL 54.81; 12 ACN 54.41; 13 USA 50.38; 14 KLM 48.87; 15 QAN 43.76; 16 CAT 36.14; 17 IBE 30.78; 18 KAL 28.06; 19 AMW 23.82; 20 TII 19.76; 21 ALI 19.68; 22 SAS 18.82; 23 CHI 18.23; 24 VAR 17.47; 25 GUN 17.21.

December 2002: (KLM) contract to Enigma Inc, Burlington, Massachussets, for its 3C Version 8 software to manage integration and delivery of all (KLM)'s maintenance, repair, & overhaul (MRO) documentation. Deployment to some 3,500 (KLM) engineers & mechanics (MT) at Schiphol Airport, Amsterdam, will be via the Web, with CD-ROM as a backup, collecting 15 gigabytes of data from disparate parts of the (KLM) organization. Integration with (KLM)'s Documentum-based management system is planned initially; integration with (SAP)'s enterprise, resource planning software, is to be considered later.

A Dutch arbitration court has ordered (KLM) to pay Alitalia (ALI) EUR 250 Million/$250 Million as a penalty for walking away from an alliance between the two carriers in April 2000. (ALI) was ordered to refund EUR 100 Million to (KLM) for its investment in Milan's Malpensa airport.

In January, code share with Comair (CML) on Johannesburg, Cape Town, Durban, Port Elizabeth. In March, Amsterdam - Casablanca (737-400, daily). In October, to Cape Town (nonstop).

747-400 ("City of Jakarta") with modified livery. Bright blue covers more of the airplane, dark-blue strip is much thinner, white strip below that has been dropped entirely, logo is enlarged. Engines and underside of airplanes are a cool grey.

January 2003: 4th Quarter = -EUR 66 Million/-$70.6 Million (-EUR 94 Million): +15% (PAX); 77.2% LF (+3.6).

Ryanair (RYR) acquires "buzz" (BZZ) from (KLM) for EUR 23.9 Million. (BZZ) currently operates a network of 21 routes from London Stansted (STN) to points in Germany, Holland, France, and Spain, as well as 2 domestic French routes. It has a fleet of 6 737-300's and 6 B AE 146's. (KLM) agreed to take back the B Ae 146'S by March 2004.

Due to poor "market circumstances" (KLM) will ground 1 747-300 and a few commuter airplanes in summer 2003 with the possibility of a 2nd 747-300 and a 3rd F 50 being withdrawn later.

February 2003: To add Trondheim and Bern to its network, and increase frequencies to Glasgow, Edinburgh, Frankfurt, Munich, Istanbul, Athens, Lisbon, Nice, Rome, Venice, and Bologna, whilst "trimming" frequencies to London City, Cardiff, Humberside, Leeds/Bradford, Stuttgart, and Hannover. Next month, Amsterdam - Thessaloniki (737, 5/week) taken over from Transavia (TAV).

On its intercontinental network, will increase its code share with China Southern (GUN). Code share with Comair (CML) will add Durban and Port Elizabeth. Will take over daily flights, Amsterdam - Casablanca, currently operated by Transavia (TAV). In Central and South America, will reduce frequencies to Sao Paulo and increase flights to the Dutch Antilles and Bonaire. In the Middle East, will reduce weekly flights to Amman and Damascus.

Completed its 1st 737-800 commercial flight using SITA's (VHF) Digital Link (VDL), Aircom system. Communications during the flight took place using the new (VDL) Mode 2 protocols. In the coming months, will equip 2 more 737-800's and is preparing a business case for installation on other fleet types.

March 2003: Code share with Malev (HGA), Budapest - Skopje (F 70/CRJ200, weekly). Expands code share with China Southern (GUN), Amsterdam - Beijing.

2002 = 58.60 Billion (RPK) (-.4%); 4.17 Billion (FTK) (+2.7%).

April 2003: As the war in Iraq and the Severe Acute Respiratory Syndrome (SARS) virus alert continues to have an adverse impact on passenger demand, (KLM) is implementing "far-reaching measures" designed to improve results, including cutting -3,000 people (-9%), cutting capacity on Middle East and USA routes by -20% (RPK), and on European routes by -5% (RPK).

30,381 employees.

World Top 20 Airlines 1st QUARTER Traffic (Billion) (RPK):
1 (AAL) 44.67; 2 (UAL) 39.66; 3 (DAL) 36.82; 4 (NWA) 26.65; 5 (BAB) 23.31; 6 (AFA) 23.27; 7 (CAL) 21.35; 8 (DLH) 20.62; 9 (SWA) 17.53; 10 (KLM) 14.04; 11 (USA) 13.28; 12 (SIA) 12.20*; 13 (ACN) 9.65*; 14 (CAT) 8.51*; 15 (AMW) 7.84; 16 (QAN)* 7.18; 17 (KAL)* 6.72; 18 (IBE) 6.17*; 19 (EAD) 5.69*; 20 (AAT) 5.42. * 2 months only.

May 2003: Fiscal Year 2002 = -EUR 416 Million/-$477.7 Million (- EUR 156 Million). 1st Quarter = -EUR 447 Million (-EUR 108 Million): including -EUR 9 Million on sale of buzz (BZZ) to Ryanair (RYR).

(KLM) and Nedlloyd are in talks to sell Martinair (MTH).

June 2003: Next month, Malabo (Equatorial Guinea) - Douala (Cameroon) (767-300ER, 2/week). In September, Amsterdam - Baghdad (767, 4/week). In October, Amsterdam - Cape Town (5/week, nonstop).

2002 = -$416.3 Million (-$139.9 Million): 59.42 Billion (RPK) (+1.7%); +1% (ASK); 79.4% LF (+.5); 23.4 Million (PAX) (+46.9%); 4.20 Billion (FTK) (+3.6%); 29,867 Employees (-1.7%).

(KLM) purchases the 20% stake in Transavia (TAV) owned by (NIB) Capital.

2002 TOP 25 WORLD AIRLINES - TRAFFIC (Billion) (RPK)
1 (AAL) 195.81; 2 (UAL) 176.15; 3 (DAL) 152.66; 4 (NWA) 115.91; 5 (BAB) 99.71; 6 (AFA) 96.80; 7 (CAL) 95.51; 8 (DLH) Grp 88.57; 9 (JAL) 83.54; 10 (QAN) 75.23; 11 (SWA) 73.05; 12 (SIA) 71.12; 13 (ACN) 69.42; 14 (USA) 64.47; 15 (KLM) 58.89; 16 (ANA) 52.97; 17 (CAT) 49.04; 18 (TII) 48.51; 19 (KAL) 41.80; 20 (IBE) 40.47; 21 (MAS) 36.90; 22 (AMW) 31.98; 23 (SAS) Grp 30.91; 24 (EAD) 30.17; 25 (ALI) 29.84.

2002 TOP 25 WORLD FREIGHT CARRIERS (Billion) (FTK)
1 (FED) 13.20; 2 (LUB) 7.16; 3 (UPS) 6.62; 4 (KAL) 6.25; 5 (SIA) 6.08; 6 (AFA) 4.87; 7 (CAT) 4.85; 8 (CHI) 4.60; 9 (JAL) 4.39; 10 (CLX) 4.16; 11 (BAB) 4.12; 12 (KLM) 3.99; 13 (EVA) 3.28; 14 (NWA) 3.24; 15 (AAL) 2.93; 16 (UAL) 2.79; 17 (AAR) 2.75; 18 (NCA) 2.21; 19 (POA) 1.97; 20 (EAD) 1.96; 21 (MAS) 1.92; 22 (BEJ) 1.88; 23 (TII) 1.824; 24 (DAL) 1.823; 25 (ACN) 1.58.

July 2003: 30,380 employees.

Responding to increased business-travel demands linked to local oil industries, starts Amsterdam to Malabo, continuing to Douala (2/week). In October, (KLM) code share services with China Southern (GUN)to Beijing and Shanghai, will be extended to Guangzhou, Shenzen, Wuhan, Changsa, and Guilin.

Plans to phase out its 7 747-300's by December 2003. 2 737-300's to leave the fleet in autumn.

August 2003: In October, St Maarten - Amsterdam (MD-11, nonstop northbound, 2/week). Amsterdam - Newark.

According to a French newspaper, Air France (AFA) will take a 100% controlling interest in (KLM) through a share swap. Following the transaction, the French state will sell 20% of its 54% stake on the market reducing its holding in the combined entity to under 20% stake in (AFA), while (KLM) shareholders will receive 15% of the government stake in (AFA).

+1 order (5/04) 737-900 (ordered by Transavia (TAV) to replace 2 737-300's being phased out in late 2003.

September 2003: Winter schedule will include introduction of 6 777-200ER's on service to Toronto, Cape Town, New York (JFK), Nairobi, and Tokyo. Will stop using 747-300's on its network. To Johannesburg (747-400, daily). Code share with Continental (CAL) between Amsterdam and Almaty, Budapest, Casablanca, Dar Es Salaam, Doula, Istanbul, Kiliminjaro, Malabo, Prague, and Trondheim, with increase in USA destinations to 68.

In October, new joint long-haul 747F service with China Southern (GUN) between Shanghai Pudong and Amsterdam Schiphol.

Air France (AFA) board approves merger with (KLM) to be completed by April 2004, to give the European Commission (EC) enough time to analyze the deal. The airlines will be placed under a France-based corporate holding company umbrella named Air France (AFA)-(KLM), which effectively makes it the world's 3rd largest airline.

Sells its 9% stake in TUI Nederland NV to parent organization, TUI Group GmbH for EUR 7.25 Million/$8.1 Million, generating a book profit of EUR 5.6 Million.

October 2003: (AFA) merger with (KLM) will finalize in April 2004.

1st 777-206ER (33711, PH-BQA), (ILF) leased. Plans to use its 777's on intercontinental routes to New York, Toronto, Tokyo, Cape Town, Nairobi, and other destinations. This will be the 1st airplane equipped with the new Boeing Electronic Flight Bag (EFB) on the flight deck. Additionally, is introducing the Matsushita System 3000i in-flight entertainment system. Seats which recline into a nearly flat position, feature video monitors, in-seat reading lights, lumbar support, back massage and privacy hoods.

December 2003: Received the approval of Queen Beatrix to retain its "Royal" prefix, even after its sale to Air France (AFA).

January 2004: 4th Quarter = +EUR 44 Million/+$53.8 Million (-EUR 66 Million): -2% (RPK); -6% (ASK), -2.8 LF.

February 2004: USA Department of Justice and European Commission (EC) give OK for (KLM)/(AFA) merger.

In June, Amsterdam - Lahore - Karachi (777, 3/week).

March 2004: Amsterdam - Tbilisi (737-900, 180 PAX, 2 class, 3/week).

747-206B (21549) donated to Aviodrome at Lelystad.

April 2004: Doubled the number of self-service check-in machines and baggage drop-off points at Schiphol Airport.

May 2004: In the early days of the merged (AFA)/(KLM) airline, has coordinated schedules throughout the short-, medium-, & long-haul networks of both carriers. Three new services Amsterdam - Bordeaux, Amsterdam - Marseilles; & Paris (CDG) - Rotterdam. In June, (AFA) begins code sharing with (KLM) on all services between Paris (CDG) and Amsterdam, including those operated by affiliates of both companies, for a total of 15 flights on weekdays.

Air France (AFA) has acquired nearly 90% of (KLM). The combination represents the 1st cross-border merger of major European airlines and creates a company that ranks as the 3rd largest company in the world after American Airlines (AAL) and United Airlines (UAL) in terms of passenger traffic (RPK's). The new company, Air France (AFA)-KLM, will own 100% of both airlines but (KLM) will remain Dutch, with 51% of its voting rights held by the state and two foundations. That structure will allow (KLM) to retain its foreign landing rights. The stake of the French state in (AFA) will fall to 44.7% from around 54%. (AFA) staff hold 10.5% of the new company, and former (KLM) holders (17.3%). Some 45% of the firm will be traded on the market.

In September, they are expected to join the Star (SAL) Alliance.

Fiscal Year 2003 = +EUR 30.14 Million/+$29 Million (-EUR 416 Million/-$433.89 Million): 57.37 Billion (RPK) (-2.1%); 79.2% LF; 18.84 Million (PAX) (+.5%); 4.11 Billion (FTK) (+3%).

Selects (CF6-80E1) for new A330-200's and its Engineering & Maintenance becomes a (CF6-80E1) engine overhaul center.

June 2004: Launches reciprocal e-ticketing with Air France (AFA). Code share with China Southern (GUN), Shanghai - Beijing - Amsterdam (777, 3/week).

Combined (AFA/KLM) traffic in May increased year-on-year by +21.3% to 14.26 Billion (RPK)s, while capacity was ahead +15.4%, driving load factor +3.7 to 76.3% LF, cargo +11.6% (FTK).

Amadeus acquires a controlling 55% stake in travel portal Opodo for EUR 62 Million/$74.5 Million in cash. Opodo was created by 9 European network airlines: Aer Lingus (ARL); Air France (AFA); Alitalia (ALI); Austrian Airlines (AUL); British Airways (BAB); Finnair (FIN); Iberia (IBE); (KLM); & Lufthansa (DLH) - - whose stakes will be reduced in proportion to the investment by Amadeus. The 3 biggest shareholders: (AFA); (BAB) & (DLH) - - will hold 10.3% each, while the shareholdings of (ARL) & (AUL) will be diluted to 0.51% each. Amadeus, which is majority owned by (AFA); (IBE) & (DLH), said Opodo will continue to operate as a separate company.

SkyTeam: Aeroflot (ARO) (applicant); Aeromexico (AMX); Air France (AFA)/(KLM); Alitalia (ALI); (CSA) Czech Airlines; Continental Airlines (CAL) (agreed to join); Korean Air (KAL); & Northwest Airlines (NWA) (agreed to join).

July 2004: Uses Mxi Technologies' Maintenix software product to "enhance its Engineering & Maintenance operations."

August 2004: (KLM)'s Engineering & Maintenance department went live with Enigma 3C Version 8 to deliver "maintenance data to all of its overhaul and line-maintenance mechanics."

Set a record by selling >EUR 1 Million/$1.2 Million worth of tickets online, for 10% of airlines' sales over the Internet. Aims for 40% of sales online by 2007.

In October, Amsterdam - Abuja - Malabo - Amsterdam.

September 2004: Northwest Airlines (NWA), (KLM), & Continental Airlines (CAL) become the newest members of the SkyTeam (STM) alliance to join Aeromexico (AMX), Air France (AFA), Alitalia (ALI), (CSA) Czech Airlines, Delta (DAL), & Korean Air (KAL). (KLM) Cargo became the newest member of SkyTeam Cargo including (ALI) Cargo, (AMX) Cargo, (AFA) Cargo, (CSA) Cargo, (DAL) Air Logistics, & (KAL) Cargo.

Along with Martinair (MTH), will install an Israeli anti-(SAMM) system on airplanes assigned to fly in Africa and the Middle East.

Selects Boeing & Air France Industries (AFA) for a joint component services support program for its 737-800's, 737-800's, & 777's.

November 2004: INCDT: 737-406 (2200-25424, PH-BTC) ran off runway on landing at Barcelona, after directional control was lost because of damage to nosewheel strut = all 6/140 uninjured & OK but airplane is W/O.

In March, Amsterdam - Khartoum - Addis Ababa (767-300ER, 2/week).

December 2004: Code share with Gulf Air (GUL), Abu Dhabi to Islamabad, Karachi, Lahore, & Muscat, plus Bahrain - Muscat.

(KLM) Engineering & Maintenance opened its EUR 75 Million, new maintenance complex at Amsterdam Airport Schiphol for airplane (GE) engines for (KLM) and other airlines. The main building has 40,000 sq m of floor space and can handle 350 engines/year.

In January 2005, has e-ticketing implemented on all its flights from the Netherlands.

+2 orders (January 2006) 777-200ER's.

January 2005: Air France (AFA)-(KLM) Group created a so-called Cargo European House that it described as "a unified management body" for the carriers' cargo businesses. The Cargo European House should be operational by year end and will be in charge of network management, marketing & sales, with each airline continuing to manage its own operations.

March 2005: Signed agreement with OnAir to provide Short Message Service (SMS) text messaging & e-mail on its 10 777's, which operate on routes to New York, San Francisco, Sao Paulo, Cape Town, Dubai, Tokyo, Shanghai, Beijing, & Manila. Will also install OnAir on 6 new A330's flying mainly to the Middle East & Africa. OnAir SMS & e-mail service will be avialable on A330's of its partner Northwest (NWA) flying to the USA.

Air France (AFA)/(KLM) have merged their frequent-flier programs into one new program called "Flying Blue."

April 2005: Code share with Portugalia, Amsterdam to Oporto, and Lisbon.

May 2005: 34,529 employees.

Fiscal Year (FY) Air France (AFA)-(KLM) Group 2004 = +EUR 770 Million/+$929.7 Million (+EUR 351 Million): +33.3% fuel costs.

5/3 orders 777-200F's.

July 2005: In October, Amsterdam - Hyderabad (3/week)). Will increase capacity on its daily service to Delhi by deploying 777's on the route instead of MD-11's. In November, Amsterdam - Entebbe (767-300, 3/week).

August 2005: Air France (AFA)/(KLM) = 102,722 employees.

September 2005: (KLM) will deploy its first A330-200 in daily service between Amsterdam and Washington beginning today. The airline has ordered six A330-200s and will be leasing two more from ILFC (ILF). They gradually will replace its 767-300ERs.

Switzerland-based elite travel specialist PrivatAir (PTS) added another airline customer for its services tailored to long, thin business markets. Beginning October, the company will operate a Boeing Business Jet on behalf of (KLM) between Amsterdam Schiphol and Houston George Bush Intercontinental Airport six times per week. The BBJ, which is based on the 737-700, will be equipped with 44 lie-flat business class seats in a 2 - 2 configuration.

Service will be provided on an (ACMI) wet-lease basis, replacing (KLM)'s existing thrice-weekly 767 services and complementing its continuing daily 747-400 service. Although total capacity will decline, business class capacity on the route will increase by +45%.

(KLM) said it is launching the new service in response to "the great demand for World Business Class seats on this route." The service will be operated in codeshare with Northwest Airlines (NWA). The airplane will retain the PrivatAir (PTS) livery but will bear the words "Operated on behalf of KLM" on its fuselage and in the cabin.

PrivatAir (PTS) provides similar services on behalf of Lufthansa (DLH) from Dusseldorf to Newark and Chicago and from Munich to Newark using BBJs and Airbus A319LRs. It operates from Zurich to Newark on behalf of Swiss International Air Lines (CSR).

October 2005: Air France (AFA) Cargo and (KLM) Cargo are implementing the next phase in their cooperation that aims to present One Face to the Customer without, however, integrating the operational activities of the two organizations. A Joint Cargo Management Team headed by Michael Wisbrun is responsible for the integrated commercial functions, including sales, customer service, products, marketing, revenue management and network planning. Strategy and development functions, including commercial Information Technology (IT) functionality and alliances, also are integrated into the management team. Air France (AFA) - (KLM) Cargo already has created 12 joint local cargo sales and customer service offices worldwide and in the coming three months this number will be more than doubled. The new winter schedule will see some further coordination from Paris Charles de Gaulle as well as Amsterdam Schiphol.

Amadeus entered into exclusive negotiations with Air France (AFA) - (KLM) Group to adopt Altea Customer Management Solutions, Amadeus VP-Airlines Business Group Frederic Spagnou stated. The negotiations comprise three different steps, the first being the introduction of Altea Reservation at (KLM). The second involves Altea Inventory for (AFA) and (KLM) and the third Altea Departure Control for the carriers.

(KLM) Engineering & Maintenance said Eos (EOS) signed a Maintenance and Pool Agreement covering Maintenance Repair & Overhaul (MRO), availability and transport for some 325 components on the transatlantic startup's 757. Eos (EOS) launched service between New York (JFK) and London Stansted last week.

Air France (AFA) - (KLM) Group is extending its French spoke network to (KLM)'s Amsterdam hub with a new twice-daily service between Strasbourg and Schiphol. The route, on which (AFA) and (KLM) will codeshare, will commence Oct 31 and will be operated by Regional, an (AFA) partner, with ERJ-135s. Air France (AFA) and (KLM) already link Bordeaux, Clermont-Ferrand, Lyon, Marseille, Nice and Toulouse to Amsterdam. They will launch a Paris - Eindhoven route Oct 30 with two daily flights, increasing to three on December 12.

December 2005: (KLM) will reduce fuel surcharges effective December 21 by €1/$1.18 to €12 per segment within Europe and by €5 per coupon to €33 within its intercontinental network. At the same time, it increased the security surcharge on all tickets by €2 to €7 per segment "to cover extra security measures that have been taken."

Separately, (KLM) introduced an all-new catering model for European economy flights, bringing it "more in line with that of Air France (AFA)'s economy product," it said in a statement. The new model includes reintroduction of wine and beer onboard and the inclusion of a number of A brands.

(KLM) Engineering & Maintenance (E&M) extended its jet airplane Maintenance Repair & Overhaul (MRO) contract with Focus Air (FCS), which wet-leases 747 freighters. (KLM) (E&M) will handle engine and component maintenance, "A" checks, engineering and line maintenance.

(KLM) is in the process of launching its fully revamped website in 70 countries as part of a broader objective to achieve a global online booking score of 40% in Fiscal Year (FY) 2007 - 2008. Its current score is 12%.

Boeing has now confirmed (KLM) has placed an order for 1 737-800 & 3 777-200s.

January 2006: Air France (AFA) - (KLM) Group denied reports it is increasing its stake in Alitalia (ALI). Earlier this week, Finanza e Mercati indicated (AFA) - (KLM) might take over the struggling Italian carrier. "We are currently not holding merger talks and we are not increasing our holding in Alitalia (ALI)," Air France (AFA) spokesperson Samuel Coulon said. "We start to get used to the reports in the Italian press." He added that the French-Dutch group's position has not changed: "We have always said Alitalia (ALI) has to be privatized and be profitable before we initiate talks to join our group."

During the presentation of the group's first-half results in November, Chairman Jean-Cyril Spinetta confirmed that the company will participate in the €1 billion/$1.19 billion Alitalia (ALI) recapitalization in order to keep its stake at 2%. Alitalia (ALI) holds a 2% stake in (AFA).

"Air France (AFA) and Alitalia (ALI)'s equity swap of 2% reflects the importance of the partnership developed between the two airlines," Spinetta stressed, noting the stake now is valued at €37 million compared to an approximate investment of €20 million. (AFA) and Alitalia (ALI) have a joint venture between France and Italy while (KLM) and the Italian carrier have a codeshare agreement.

Separately, Italian market regulator Consob confirmed that two investment funds and Norway's central bank have purchased substantial stakes in Alitalia (ALI), Reuters reported. London-based investment management company Walter Capital Management acquired 8.19%, making it the second-largest shareholder after the Italian Treasury. Newton Investment Management bought a 4.22% stake and Norges Bank currently owns 2.04%. The Italian state lowered its majority stake to 49.89% during the recap operation.

Air France (AFA)-(KLM) Group reported a +11.9% increase in December passenger traffic to 15.6 billion (RPK)s. Capacity climbed +9% to 19.54 billion (ASK)s and load factor rose +2.1 points to 79.8% LF. Passengers enplaned increased +8% over the year-ago month to 5.6 million. Cargo (FTK)s grew +7.5% to 985 million against a +9% lift in (ATK)s to 1.4 billion and cargo load factor declined -1 point to 70.4% LF.

For the full year 2005, (AFA) - (KLM) = Passenger traffic 185.71B (RPK) (+8.3%) (3rd highest in world); Freight traffic 10.61B (FTK) (+2.3%); 69.16M passengers (+6.1%).

Three weeks after the USA Department of Transportation (DOT) tentatively rejected their request for transatlantic antitrust immunity, SkyTeam members Delta Air Lines (DAL), Northwest Airlines (NWA), (KLM) Royal Dutch Airlines, Air France (AFA), Alitalia (ALI) and Czech Airlines (CSA) withdrew their application. In a joint filing to (DOT) yesterday, the airlines said they believe "the department reached the wrong decision for the wrong reasons," but added that "in light of the fact that [DOT] remains open to a grant of antitrust immunity. . .in the future, [they] have decided at this time to withdraw their request." At the same time, they asked the department to finalize its tentative approval of blanket codesharing authority among the six carriers.

Separately, Northwest (NWA) in a statement, blasted (DOT)'s decision as "arbitrary, capricious and inconsistent with established (DOT) precedent and international aviation policy [and] a giant step backwards in a battle USA airlines and their employees - - and ultimately consumers - - are engaged in and losing." (NWA) further noted that "the USA airline industry is in a state of crisis. Four major air carriers, including Northwest (NWA) and Delta (DAL), are operating under Chapter 11, as are several national carriers. Foreign airlines are profitable."

(LAN) finalized a 10-year component support agreement with Air France Industries (AFA) and (KLM) Engineering & Maintenance (E&M) covering its 24 767-300ERs. It is planning to add 10 more 767-300ERs through 2008. The contract is based on support per flight hour and is backed by the (AFA) and (KLM) (E&M) Americas component pool in Miami. Repairs will be performed by either (KLM) (E&M), AMG or (AFA).

Worldspan and (KLM) signed a multiyear agreement making the carrier's complete content, including that offered through its website and reservations agents, available to Worldspan with no surcharges.

(IATA) announced the launch of its (IATA) Catering Quality Assurance (ICQA) program, which it called "the industry's first global food processing safety and quality assurance" initiative. The association will partner with Medina Quality Assurance Services, which will audit catering facilities in compliance with (ICQA) standards on a contractual basis for program participants. Medina will conduct two types of audits: Unannounced on-site Validation Audits and Web-based e-Audits, which are "customized questionnaires designed to identify deficiencies." An (ICQA) Council will be established to oversee the program, approve the audit schedule and update standards, guidelines and audit procedure. (IATA) said Air Canada (ACN), Aeroflot (ARO), Japan Airlines (JAL), (KLM) and Northwest Airlines (NWA) have confirmed their participation in (ICQA).

(KLM) will discontinue service from Amsterdam to Tbilisi from Mar 26th. The airline currently operates 3 flights a week using a 737-900. (KLM) will launch a twice-weekly Amsterdam - Chengdu service from May 28 using 777-200ERs departing Amsterdam on Wed/Sun and Chengdu on Mon/Thu in cooperation with China Southern Airlines (GUN). Chengdu is (KLM)'s fourth Chinese destination.

February 2006: Air France (AFA) - (KLM) reported systemwide passenger traffic of 15.74 billion (RPK)s in January, a +9.5% increase over the year-ago month. Capacity grew +8.1% to 19.92 billion (ASK)s and load factor rose +1 point to 79% LF.

(KLM) will become a Worldspan Interchange participating carrier to "help [it] achieve the industry goal of 100% e-ticketing in 2007." According to the (GDS), Worldspan Interchange is "a breakthrough e-ticket message communications hub with an advanced Editfact message translation process."

(KLM) will increase frequency on its Amsterdam to Newark route from Mar 26th. In addition to the daily A330-200 service, the airline will operate a 2nd flight on Thu/Sun using a 777-200 for a total of 9 flights a week. On Jun 3rd, (KLM) will add a 2nd Saturday flight, also with a 777-200, for a total of 10 a week.

Air France (AFA) - (KLM) reported a sharp increase in net earnings in the third fiscal quarter ended Dec 31 to +€77 million/+$91.7 million from +€23 million in the year-ago quarter thanks to "dynamic" passenger activity featuring record load factors and strong unit revenues plus an "encouraging recovery" of its cargo business. Turnover increased +12.4% to €5.43 billion in the quarter from €4.83 billion in the corresponding 2004 period. Operating expenses were up +8.9%, with fuel costs rising +27.4% to €1 billion. Operating profit came in at +€190 million versus +€20 million in the year-ago period.

Passenger traffic rose +11% on a capacity increase of +7.6%, leading to a +2.4-point gain in load factor to 80.1% LF. Passenger yield improved +0.9% to 8.52 euro cents. Revenue per (ASK) grew +4% to 6.81euro cents and unit cost per (ASK) inched up +0.6% to 6.56 euro cents.

Cargo traffic climbed +4.9% on a capacity hike of +8.3% and load factor declined -2.2 points to 69.2% LF. But cargo revenue jumped +14.5% to €813 million with operating income amounting to +€98 million, an increase of +18.1% from the year-ago period. Third-party turnover at the group's maintenance subsidiary was up +24.7% to €237 million and operating income rose strongly from +€5 million in the year-ago quarter to +€24 million.

For the nine-month period, the company's net earnings grew +24% to +€906 million. Revenues climbed +9.4% to €16.25 billion, operating expenses rose +6.9% to €15.3 billion and operating profit surged +76.5% to €940 million. Operating margin improved by +2.2 points to 5.8%.

(AFA)-(KLM) warned that its traditionally weak January - March fourth quarter will be affected by the fact that Easter week falls in April. "Nevertheless, if current market conditions are maintained, Air France (AFA) - (KLM) has an objective of operating income for the full year of over +€900 million," it said.

Air France (AFA) - (KLM) announced the signing of a protocol agreement finalizing implementation of a European Works Council to "inform and consult workers about all matters concerning the Group as well as issues of a transnational character." The joint body, established to conform with European law, will supersede those of the individual airlines but will not replace staff representative bodies from each company and in each country. The council will comprise 37 members appointed or elected for a period of four years.

Air France (AFA) - (KLM) Group said it will pursue a "profitable growth strategy" during the summer by boosting capacity +5.6% over summer 2005, comprising a +6% increase on its long-haul network, a +6.3% rise on its international medium-haul network and a +1.1% increase domestically.

Long-haul growth, including a +19.7% ramp-up in capacity to the Middle East, will come from additional frequencies and larger airplanes. (KLM) will offer a new destination, Chengdu, with twice-weekly service from Amsterdam. The group will offer 47 weekly flights to China. On its "oil, gas and mining routes" it will add a second daily flight to Houston plus new service to Tehran and possibly Riyadh. It also will increase capacity on routes to Asia and the Americas through cooperation with its SkyTeam partners.

On the European network, the group will add Yerevan (thrice-weekly aboard an (AFA) A320), Leipzig (twice-daily operated by Regional) and Katowice (thrice-daily operated by Brit Air) this summer. (AFA) will add second daily flights to Zagreb and Kiev and a daily flight from Paris (CDG) to Algiers, increase service to Athens and Tel Aviv and suspend its Nantes - London Gatwick service in addition to other operational changes. The group said there "will be very few changes" on its French network save select modifications.

Amsterdam Schiphol Airport (AMS) served 3.03 million passengers in January, an increase of +2.3% over January 2005. The number of transfer passengers rose by +3.4% over January 2005, whereas the number of O/D passengers increased by +0.9%. Air transport movements decreased slightly by -0.2%, to 30,305, whereas average Maximum Take Off Weight (MTOW) rose +0.6% to 102.2 tonnes. Punctuality at (AMS) improved markedly in January compared to the year-ago period. Arrival punctuality rose by +4.9 points to 82.9% and departure punctuality by +4.3 points to 77.2%.

767-306ER (28098, PH-BZE), returned to (ILF), leased to North American Airlines (NNA). 777-206ER (34711, PH-BQL "Litomysl Castle"), delivery.

March 2006: Air France (AFA)-(KLM) said it posted a "further good performance both in terms of traffic and unit revenue" in February. Passenger traffic increased +8.5% over the year-ago month to 13.93 billion (RPK)s on a +6.9% rise in capacity to 17.93 billion (ASK)s. Load factor improved +1.1 points to 77.7% LF. The group carried nearly 5 million passengers, up +5.1%.

(KLM) named Senior VP, Operations Control & Fleet Services, Michel Coumans Managing Director of KLM cityhopper and CEO of KLM cityhopper UK (AUK), effective April 1. He succeeds Elfrieke van Galen, who will take a new position within (KLM) Group.

(KLM) uk Engineering, a subsidiary of (KLM) Engineering & Maintenance, signed an exclusive five-year, €15 million contract with TNT Airways (TNB) for heavy maintenance of TNT (TNB)'s B Ae 146 fleet. The agreement is a renewal of a current contract and extends the number of airplanes covered to 21.

Sabre Travel Network signed a multiyear full-content access agreement with KLM.

(KLM) leased a new A330-200 (CF6-80E2) from ILFC (International Lease Finance Corporation) (ILF) for 6 years. The airplane is scheduled to be delivered in May 2007.

April 2006: Air France (AFA) - (KLM) flew 15.94 billion (RPK)s in March, a +6.6% rise over the year-ago month. Capacity increased +7.5% to 20.06 billion (ASK)s, dropping load factor -0.7 point to 79.4% LF.

Air France (AFA) and (KLM) launched a combined Internet check-in facility allowing passengers to check in for (AFA) flights on (KLM)'s website. Effective next month, (KLM) will accept all e-tickets issued by SkyTeam members.

(KLM) is increasing its fuel surcharges adding €5 per stretch on all long-haul segments effective April 15. Surcharge on intercontinental flights will rise to €45 but remain at €15 per segment on European routes.

Netherlands and Surinam agreed to liberalize air traffic between the countries effective May 1. Two Dutch carriers, Martinair (MTH) and ArkeFly (HOL), will be allowed to operate the Amsterdam - Paramaribo route. At present, only (KLM) and Surinam Airways (SUR) have the right to fly between the capitals. Both TUI-controlled ArkeFly (HOL) and Martinair (MTH) reportedly intend to commence twice-weekly services using 767-300ERs.

China Southern Airlines (GUN) and (KLM) expanded their codeshare agreement to include twice-weekly 777 service between Chengdu and Amsterdam operated by (KLM).

Amadeus announced that (KLM) signed a Full Content Option agreement, which is available to European carriers.

(KLM) Engineering & Maintenance was contracted by Eagle Aviation (EGZ) of France to perform four-week "D" checks on two 747-400s.

2 777-206ER's (34712, PH-BQM, Machu Piichu;" 32720, PH-BQN "Nahanni National Park"), (ILF) leased & A330-203 (738, PH-AOD), deliveries.

May 2006: Air France (AFA)-(KLM) flew 16.49 billion passenger traffic (RPK)s in April, a +10% increase over the year-ago month. Capacity rose +4.8% to 19.86 billion (ASK)s and load factor was up +3.9 points to 83.1% LF. (AFA)-(KLM) flew 918 million (FTK)s, an increase of +1.1%, as cargo capacity grew +2.1% to 1.36 billion (ATK)s.

Air France (AFA) - (KLM) Group reported net income of +€913 million/+$1.17 billion for the financial year ended March 31, a +29.3% increase over the +€706 million earned in 2004 - 2005. Last year's results were restated to account for pension fund surpluses at (KLM). "The year 2005 - 2006 was marked by two features: Strong world economic growth, leading to extremely dynamic levels of activity in our sector, and a significant rise in oil prices. In this environment, we have confirmed the success of the Air France (AFA) - (KLM) merger," Chairman and CEO, Jean-Cyril Spinetta noted.

Full-year operating revenues rose +10.2% to €21.45 billion whereas costs were up +8.4% to €20.51 billion. Consequently, operating profits soared +69.3% to +€936 million from +€553 million in the prior year. Operating margin improved "significantly" from 2.8% to 4.4%. "The synergies generated by the merger, combined with our ongoing cost-control measures, have not only enabled us to attenuate the impact of the rise in fuel prices, but also to improve our margins significantly," Spinetta said. Fuel costs reached €3.59 billion, up +32% from the prior Fiscal Year (FY).

Passenger traffic grew +8.6% (RPK), on a capacity increase of +6.2%, leading to a +1.7 point lift in load factor to 80.6% LF. This was +5 points above the Association of European Airlines (AEA) average, "confirming Air France (AFA) - (KLM)'s strengthening position in these markets," according to the company. Passenger revenues increased +0.2% to €16.94 billion with yield rising +1.5% to 8.40 euro cents.

Spinetta's outlook was cautious as he said, "The current year has begun with a further sharp rise in oil prices. Nevertheless, our aim is to generate operating income of at least the same level as last year." (AFA) - (KLM) expects to boost capacity by some +5% this year.

Net income for the fourth quarter was +€7 million, down -30.3% on the year-ago period. Activity levels remained "robust at all the group's businesses," lifting revenues +12.7% to €5.19 billion. Operating charges rose +12.1% to €5.2 billion, mainly owing to fuel costs. Operating result was "at breakeven" as the loss narrowed to -€4 million from -€30 million in the year-ago quarter.

As Dutch flag carrier, (KLM) operates an extensive network of services across the world. The airline has a partnership with antitrust immunity, with Northwest Airlines (NWA).

(IATA) Code: AF - 057. KL - 074.

(ICAO) Code; AFR - AIRFRANS. KLM - KLM.

Parent organization/shareholders: Air France (AFA)-(KLM) Group (100%).

Owns: Kencargo Airlines International (20%); Kenya Airways (26%); KLM Cityhopper (100%); KLM UK (AUK) (100%); Martinair (MTH) (50%); & Transavia (TAV) (100%).

Alliances: SkyTeam; Aer Lingus (ARL); Air Alps Aviation; Air Europa (ARE); China Southern Airlines (GUN); Comair (CML); Cyprus Airways (CYP); DAE; FlyLal (LIJ); Gulf Air (GUL); Horizon Air; Kenya Airways (KEN); (KLM) Cityhopper; Malaysia Airlines (MAS); Malev (HGA); PGA - Portugalia Airlines; Philippine Airlines (PAL); Pinnacle Airlines; PrivatAir (PTS); Surinam Airways (SUR); Syrianair (SYR); TAM Linhas Aereas (TPR); Transavia Airlines (TAV); & Ukraine International Airlines (UKR).

Main Base: Amsterdam Schiphol (AMS).

Domestic, scheduled destinations: Amsterdam; Eindhoven; Maastricht; & Rotterdam.

International, scheduled destinations: Aberdeen; Abu Dhabi; Abuja; Accra; Addis Ababa; Almaty; Amman; Aruba; Athens; Atlanta; Bahrain; Bangkok; Barcelona; Beijing; Beirut; Bergen; Berlin; Birmingham; Bologna; Bonaire; Bordeaux; Boston; Bremen; Bristol; Brussels; Bucharest; Budapest; Cairo; Cape Town; Cardiff; Chicago; Clermont-Ferrand; Cologne; Copenhagen; Curacao; Damascus; Dammam; Dar Es Salaam; Delhi; Detroit; Doha; Dubai; Durham Tees Valey; Dusseldorf; Edinburgh; Entebbe; Frankfurt; Geneva; Glasgow; Gothenburg; Guangzhou; Guayaquil; Hamburg; Hanover; Helsinki; Hong Kong; Houston; Humberside; Hyderabad; Istanbul; Jakarta; Johannesburg; Kano; Khartoum; Kiev; Kilimanjaro; Kristiansand; Kuala Lumpur; Kuwait; Lagos; Larnaca; Leeds; Lima; Lisbon; London; Los Angeles; Luxembourg; Lyons; Madrid; Manchester; Manila; Marseilles; Memphis; Mexico City; Milan; Minneapolis; Monterrey; Montreal; Moscow; Muenster; Mumbai; Munich; Nairobi; New York; Newark; Newcastle; Nice; Norwich; Nuremberg; Osaka; Oslo; Paphos; Paramaribo; Paris; Porto; Prague; Quito; Riga; Rome; San Francisco; Sao Paulo; Seattle; Seoul; Shanghai; Singapore; St Maarten; St Petersburg; Stavanger; Stockholm; Strasbourg; Stuttgart; Taipei; Tallinn; Tbilisi; Tehran; Tel Aviv Yafo; Tokyo; Toronto; Toulouse; Tripoli; Trondheim; Vancouver; Venice; Vienna; Warsaw; Washington; & Zurich.

China Southern Airlines (GUN) expanded its codeshare agreement with (KLM) to cover the Dutch carrier's twice-weekly 777 service between Amsterdam and Chengdu.

Ryanair (RYR) was ordered by a Paris court of commerce to pay €250,000 /$321,000 to Air France (AFA) - (KLM) over misleading and disparaging advertising. Ryanair (RYR) claimed in an ad, to be "-391% cheaper" than (AFA) - (KLM), which the court concluded was unjust. It also ruled that the corruption of (AFA) - (KLM)'s slogan "Making the sky the most beautiful place on earth" to "Making the sky the cheapest place on earth" was unacceptable. The court provisionally enforced the fine regardless of whether the Irish carrier lodges an appeal.

Rockwell Collins extended its current Preferred Supplier Agreement (PSA) with Air France (AFA) through 2010 and signed a new five-year (PSA) with (KLM). Under the terms of the agreements, both airlines will purchase Rockwell Collins communication, navigation and surveillance avionics for their forward-fit airplanes and retrofit activities. The Air France (AFA) agreement also covers data link avionics, while a separate (KLM) agreement covers MultiScan weather radar on 777s.

737-8BK (33028, PH-BXU "Albatross"), CIT Group (TCI) leased.

June 2006: Air France (AFA)-(KLM) said May traffic rose +6.2% over the year-ago month to 16.18 billion (RPK)s passenger traffic against a +4.3% lift in capacity to 20.45 billion (ASK)s. Load factor gained +1.4 points to 79.1% LF. The company posted a "significant increase" in unit revenue last month, "once again driven by sustained levels of premium traffic."

China Southern (GUN), (KLM) and Sichuan Airlines (SIC), in which China Southern holds a minority stake, announced an expanded codeshare agreement covering nine China Southern (GUN) or Sichuan (SIC) flights from Chengdu and Beijing, 10 (KLM) services from Amsterdam Schiphol and all flights between (AMS) and (PEK). Agreement goes into full effect June 24.

Nine SkyTeam member carriers signed a Memo of Understanding (MOU) with the British Airports Authority (BAA) confirming their co-location at London Heathrow (LHR)'s Terminal 4 in 2008, when the new T5 opens and the airport reorganizes. The alliance said nearly 3.5 million passengers travel through (LHR) each year aboard Aeroflot (ARO), Air France (AFA)-(KLM), Alitalia (ALI), (CSA) Czech Airlines, and Korean Air (KAL). (KLM) already operates out of T4. AeroMexico (AMX), Delta Air Lines (DAL), and Northwest Airlines (NWA) are parties to the agreement and will have the option to take a place in T4 should they serve Heathrow (LHR) in the future.

The alliance will upgrade the terminal to include 32 check-in desks, additional luggage drop-off locations, lounges and space for self-serve kiosks.

The Board of Airline Representatives in the Netherlands (BARIN) sent a letter to the Dutch Upper House voicing its concern over the pending privatization of Amsterdam Schiphol (AMS), de Volkskrant reported. The 78 (BARIN) members operating at (AMS) oppose the privatization, claiming the airport will behave as a "monopolist," keeping prices and tariffs artifically high. (BARIN) also argues the legislation, on which the Upper House is scheduled to vote today, does not offer adequate protection to airlines as it does not foresee a maximum price cap or minimum requirements for service levels. The letter also warns that higher tariffs will affect Schiphol (AMS)'s hub position negatively and notes that (AMS) has lost its rank as Europe's fourth-largest airport to Madrid Barajas. They cite the example of Lufthansa (DLH), which recently announced it would exchange "expensive Schiphol (AMS)" for Dusseldorf for its feed of passenger traffic from the Netherlands.

Schiphol (AMS)'s shares are fully owned by the state sector, with the Dutch government holding 75.8%, the city of Amsterdam 21.8%, and Rotterdam 2.4%. Management is a longstanding advocate of privatization and wants to raise capital publicly in order to finance international expansion. The government is willing to sell 49% of its share, but opposition is strong. Earlier this month, the City Council of Amsterdam opposed the privatization.

Later, Dutch legislators, after more than a decade of debate, decided that Schiphol Group can be privatizad. The Upper House of Dutch Parliament yesterday ratified an Aviation Act amendment regarding the operation of Amsterdam Airport Schiphol (AMS), allowing the state to sell 49% of its holding in the group, which operates (AMS). "Schiphol Group's Supervisory Board, Board of Management and Central Works Council are pleased that parliamentary discussions regarding legislation that is required to be passed to privatize the company have been finalized," the group said in a statement. "Clarity from the Dutch Parliament has finally been provided for both the company and its employees on the company's future." The Lower House ratified the relevant legislation in June 2005.

July 2006: Air France (AFA)-(KLM) flew 16.92 billion (RPK)s passenger traffic in June, a +7.1% increase over the year-ago month. Capcity (ASK)s increased +5.8% to 20.53 billion, and load factor rose +1 point to 76.2% LF.

Air France (AFA) launched a trial with (RFID) tags to label and track passenger baggage on flights between Paris Charles de Gaulle and Amsterdam Schiphol. (KLM) joins the trial on July 10 at two baggage drop-off points in Schiphol's Departure Hall 2 (DH2). The tags will be used for all baggage dropped at those points regardless of destination. Later this year, all drop-off points in (DH2) will be equipped to handle (RFID) tags. (KLM) developed (RFID) together with Schiphol, which is responsible for facilitation.

"We are launching these (RFID) baggage tests in the hope that these labels will eventually replace the existing barcode technology. This will enable Air France (AFA)-(KLM) to secure its leading position in terms of offering passengers innovative products," (AFA) VP Operations, Pascal de Izaguirre said. The technology will be tested on Paris-Tokyo flights this summer. The new (RFID) labels, which are uniform to Air France (AFA) and (KLM), eventually will be introduced to outstations.

Airlines could save $768 million per year using passive (RFID) baggage tags, (IATA) (RFID) Project Manager, Andrew Price said.

CityJet, Air France (AFA)-(KLM)'s Dublin-based regional subsidiary, said it has concluded negotiations for the acquisition of 23 Avro RJ-85s worth a combined $221 million. The supplier was not announced but likely they will come from BAE Systems, which continues to manage a number of the airplanes. CityJet will take first delivery in November. It now operates 19 BAe 146s. "The close relationship of the new airplane type to the BAe 146 currently operated, allows the airline to dovetail its introduction into the existing fleet," CityJet said. Last year, it carried 1.5 million passengers to Paris Charles de Gaulle, Paris Orly, London City, Edinburgh, Birmingham, Gothenburg, Zurich and Florence and saw turnover rise +18% to €254 million/$323.6 million.

Delta Air Lines (DAL) and (KLM) announced a codesharing deal that will see (KLM) place its code on (DAL) flights to 15 USA destinations from Atlanta, while the USA carrier puts its code on (KLM) flights from Amsterdam to 10 European cities. The two intend to expand the agreement.

August 2006: Air France (AFA) - (KLM) flew 18.49 billion (RPK)s passenger traffic in July, up +4.9% over the year-ago month. Capacity increased +5% to 21.7 billion (ASK)s and load factor slipped -0.1 point to 85.2% LF.

(KLM) said it no longer will operate flights to "loss-making" Amman and Damascus from October 29. From that date, (KLM) passengers will have to travel via Paris Charles de Gaulle (CDG) with Air France (AFA). (KLM) announced it will not reinstate service to Beirut, even after the airport is fully operational, as "the route was already loss-making." Partner Air France (AFA) intends to resume flights from Paris Charles de Gaulle.

Air France (AFA) and (KLM) are hiking their fuel surcharges. (KLM) will increase its surcharge by +€5/+$6.40 per segment to €65 on all intercontinental flights and by +€1 per segment to €24 on all European flights on tickets issued as of August 10. (AFA) will impose further fuel surcharges of +€7 to each long-haul flight, +€1 on domestic flights and +€2 on medium-haul flights.

(KLM) appointed Arend de Jong as Senior VP Marketing & Network within the Joint Cargo Management Committee of Air France (AFA) - (KLM) Cargo. He succeeds Bram Graber, who will become Senior VP KLM Benelux. Pieter Elbers succeeds De Jong as KLM Senior VP Network.

A330-203 (770, PH-AOE "Parliament Square - Edinburgh"), delivery.

September 2006: Air France (AFA)/(KLM) flew 18.1 billion (RPK)s passenger traffic in August, up +4.8% from the year-ago month. Capacity increased +4.5% to 21.47 billion (ASK)s, nudging load factor up +0.2 point to 84.3% LF.

Air France (AFA) - (KLM) Group raised its full-year forecast and said it expects to "generate a significant increase in operating income compared to last year" as it reported a net profit of +€244 million/+$313 million for its fiscal first quarter ended June 30, more than double the +€112 million earned in the year-ago quarter.

Operating income rose +84.3% to +€411 million from +€223 million on an +11.9% increase in revenues to €5.8 billion. Expenses climbed +11.8% to €3.24 billion, driven by a +24.8% jump in fuel costs to €1.01 billion.

Activity was "dynamic" in both the passenger and cargo segments, (AFA) - (KLM) noted, and was accompanied by improvements in unit performance. Yield rose +4.5% to 8.76 euro cents as passenger revenues grew +12.1% to €4.61 billion and traffic lifted +7.7%. Unit revenues increased +7.2% to 7.14 euro cents and CASK rose just +2.9% to 6.47 euro cents. It fell -0.9% on a constant currency and fuel price basis. Capacity was up +5% and load factor gained +2 points to 81.5% LF.

Turnover from the cargo business rose +10.5% to €729 million and operating income more than doubled year-over-year to +€28 million from +€11 million. Net debt dropped to €3.72 billion from €5.5 billion on June 30, 2005.

The company yesterday once again denied mounting rumors of a pending tie-up with financially struggling Alitalia (ALI). "There are clear conditions set for a merger with Alitalia (ALI), and they are not fulfilled," (AFA) - (KLM) Deputy CEO, Pierre-Henri Gourgeon told analysts during a teleconference. "Alitalia (ALI) should be privatized, and its recovery plan should demonstrate with real figures that recovery is on track."

Gourgeon also brushed aside recent reports in the French and Italian press of a secret deal between the French and Italian governments that would exchange French support for the merger with (ALI) for renunciation by Italy's Enel energy company of any intention to bid for France's (SUEZ). The French government holds 18% of (AFA) - (KLM). The group and Alitalia (ALI) hold small cross-shareholdings of about 3%.

Amsterdam Schiphol Airport (AMS) is investigating whether ground noise can be reduced through treatment of the soil. The test, the first of its kind in the world, is being conducted on two plots of land between Runway 18R-36L and Hoofddorp-Noord and will last approximately four weeks. The plots will be plowed and measurements taken to see if the treated soil absorbs noise more effectively. Loud noises will be generated with loudspeakers and alarm pistols. Prior research has demonstrated that the condition of the soil may muffle noise, Schiphol said. The tests, performed by the (TNO) and Alterra research institutes, are part of the Reducing Nuisance at Hoofddorp-Noord umbrella project that includes local municipal and resident groups.

(KLM) will adjust its service to the Netherlands Antilles and Aruba over the next year in response to what it called "changing market conditions." From summer 2007, all flights will be aboard MD-11s instead of the present mixed fleet of 426-seat 747-400s and 282-seat MD-11s. The MD-11s will be "radically modernized" in the coming months to bring the product in line with the World Business Class and economy class standards of (KLM)'s new 777s and A330s. Frequencies will be reduced. Aruba will be served four-times-weekly, twice in combination with Bonaire and twice with St Maarten. Bonaire also will be served five-times-weekly to and from Ecuador. Daily flights to Curacao will be nonstop.

KLM will increase the frequency on its Amsterdam to Chengdu route from 2 to 3 flights a week on December 1st. Until October 27th, the airline will operate from Amsterdam on Wednesdays & Sundays, and Chengdu on Mondays & Thursdays, from October 28th flights will depart Amsterdam on Tuesdays, & Sundays, and Chengdu on Mondays & Wednesdays; starting on December 1st, (KLM) will add a 3rd weekly flight departing Amsterdam on Fridays and Chengdu on Saturdays. All flights operate with the 777-200ER. (KLM) will improve the Amsterdam - Lima route by going nonstop from the 2007 summer season. Until March 24th, the airline will continue daily MD-11 service via Bonaire, then from March 25th, (KLM) will reduce the frequency from 7 to 6 flights a week, daily except Mondays, however, the flight will operate nonstop using a 777-200ER.

(KLM) will increase the frequency on its Amsterdam to Los Angeles route from the 2007 summer season. Besides the daily afternoon B747-400 flight the airline will operate an early morning Amsterdam departure using a 777-200 as follows:
From March 26th: Mondays & Fridays;
From May 2nd: Mondays, Wednesdays & Fridays;
From June 19th: Mondays, Tuesdays, Wednesdays, Fridays & Saturdays.

(KLM) will migrate its direct sales and reservations activities from the existing Corda system to Amadeus's Altea Reservation system. Partner Air France (AFA) has been using Altea Reservation since 1992. "(KLM) expects that the migration will enable both airlines of the Air France (AFA)/(KLM) Group to better serve their customers through increased standardization and improved data exchange," it said. Implementation is expected in the first quarter of 2007.

(SAS) Cargo became the eighth airline to join Cargo Portal Services (CPS), the Unisys-operated online booking portal that gives freight forwarders free Internet access to member carriers' schedules and space availability and the ability to book and confirm shipments in real time. (CPS) membership includes American Airlines (AAL), Air Canada (ACN), Austrian Airlines (AUL), (KLM), Northwest Airlines (NWA), and United Airlines (UAL). Continental Airlines (CAL) is in the process of going live.

Air France (AFA)/(KLM) CEO, Jean-Cyril Spinetta said that "(KLM) has started to discuss a cargo joint venture with China Southern (GUN)" but cautioned that "the talks are in the initial stage," according to Reuters. Beijing is encouraging foreign airlines to set up cargo Joint Ventures (JV)s with Chinese companies, in order to meet the nation's explosive growth in airfreight demand.

KLM Engineering and Maintenance and Boeing Commercial Aviation Services have teamed to provide component maintenance services for Toronto-based Sunwing Airlines (SWG)'s 737NGs. The carrier currently operates three of the type with plans to add 10-15 more over the next five years.

Air France (AFA) ordered Boeing Class 3 electronic flight bags (EFB)for its fleet of 777s, comprising 42 in-service airplanes and 13 to be delivered. It is the eighth carrier this year to order the Class 3 (EFB), Boeing said, adding the order was the "most significant" to date from a European airline. (AFA) partner (KLM) was the launch customer for the 777 (EFB) in 2002. The Dutch flag carrier currently operates 13 (EFB)-equipped 777s and eventually will have 18.

October 2006: Air France (AFA/(KLM) flew 17.01 billion (RPK)s passenger traffic in September, a +5.9% increase from the year-ago month. Capacity was up +6.2% to 20.55 billion (ASK)s and load factor fell -0.3 point to 82.8% LF.

Amsterdam Airport Schiphol (AMS) confirmed it will not increase airline and passenger charges effective April 1 "in order to strengthen its competitive position in respect to the other European airports." However, it intends to introduce changes to takeoff and landing charges to further discourage the noisiest "marginally compliant airplanes from using the airport. These will come into force on November 1, 2007, at the earliest.

Meanwhile, Schiphol Group expressed "regret" that the City of Amsterdam, which holds 21.8% of the company, last week blocked privatization of the group. The city voted against an amendment to the Articles of Association that would have enabled a share listing to occur. "Since Schiphol Group's main competitors are listed companies, they have a competitive advantage by virtue of their ownership structure," the airport operator said. "The absence of a level playing field will weaken Schiphol Group's competitive position. By becoming a publicly listed company, possible acquisitions can be (partially) financed by shares and alliances can be entered into more easily by exchanging shares."

(AMS) management has been lobbying for a public listing for years. In June, the Dutch parliament finally ratified the Aviation Act, which makes it possible to dispose of up to one-half of the shares minus one of Schiphol Group. The Dutch government holds 75.8% and the City of Rotterdam 2.4%. Schiphol Group said it took note of the proposal put forward by the Dutch finance minister to have the city's decision annulled by the Crown.

The Air France (AFA)-(KLM) merger could deliver up to -€1 billion/-$1.27 billion in savings to the airlines by 2009, double the initially anticipated cost benefit of -€500 million, Air France (AFA)/(KLM) Vice Chairman and (KLM) President and CEO, Leo van Wijk told Dutch magazine "Zakenreis." Since the 2004 merger, the carriers have realized savings of -€660 million, he noted. He also revealed that he is considering relinquishing his titles at (KLM) when his contract expires in May 2007 in order to take a strategic role in the merged company. He said he expects to be replaced by Deputy CEO, Peter Hartman, who will retain a purely operational role as head of the Dutch entity. Final decisions will be taken later this year.

The top 20 managers of (AFA) and (KLM) will meet later this year in order to "reflect on what the 'grand plan' should be for next year and how we can take the next steps," Van Wijk said. He did not rule out further integration, "but there must be good reasons for that." Possible investment in China will be on the agenda, while he reiterated that the company would consider a stake in Alitalia (ALI)if the airline is privatized and profitable.

Delta Air Lines (DAL) and (KLM) increased their codeshare agreement from October 29. (KLM) will place its code on Atlantic Southeast Airlines and Comair (COI) flights to 29 additional destinations from New York (JFK) and Atlanta, including Santiago.

Hamilton Sundstrand (HS) signed a new agreement with (KLM) Engineering & Maintenance to expand its On-Site Support program. The deal extends the contract through 2015 and includes point-of-use consigned Hamilton Sundstrand inventory (primarily electric power generation equipment) to support additional airplane applications. (HS) also will have an expanded role in supply chain management at (KLM) Engineering & Maintenance.

(KLM) Engineering & Maintenance and Honeywell signed an agreement to establish an Auxillary Power Unit (APU) Maintenance Repair & Overhaul (MRO) center at Amsterdam Schiphol. Under the terms of the 10-year contract, (KLM) Engineering & Maintenance will be an authorized Honeywell (MRO) center for 737NG, 777, A330 and A340 (APU)s, with the potential to expand to other (APU)s, Honeywell Director Marketing, Sales & Service, Benelux & Scandinavia, Gert Mejier said at (MRO) Europe in Amsterdam last week. The center will be set up at (EPCOR), a fully owned subsidiary of (KLM) E&M, which expects to repair its first (APU) in the second quarter of 2007.

November 2006: Air France (AFA)/(KLM) flew 17.01 billion (RPK)s passenger traffic in October, a +5.6% rise over the year-ago month. Capacity climbed +6% to 20.91 billion (ASK)s, dropping load factor -0.3 point to 81.4% LF.

1st 9 months Air France (AFA)/(KLM) = 148.79 billion passenger traffic +6.9% (RPK), 8.08 billion freight traffic +4.4% (FTK), 54.9 million passengers +5.5%.

Air France (AFA)/(KLM) Group improved its fiscal first-half profit to +€618 million/+$809 million, up +50.7% from +€410 million in the year-ago semester, results Chairman, Jean-Cyril Spinetta attributed to the "unique competitive position" of the merged airline company.

Meanwhile, both Air France (AFA)/(KLM) and Alitalia (ALI) acknowledged a possible merger, but insisted talks are still at a preliminary stage despite months of speculation. "Exploratory exchanges are underway," Alitalia (ALI) said in a statement. Spinetta said during a press conference last week that (AFA)/(KLM) is still in the process of assessing the troubled Italian carrier's finances and "whether the integration of Air France (AFA)/(KLM) and Alitalia (ALI) could generate synergies." If (AFA)/(KLM) finds "positive" answers to its questions regarding Alitalia (ALI), and the potential benefits of a merger, "it then may be possible to start discussions," he said.

(AFA)/(KLM) appears to hold a strong hand going into any talks as revenues for the fiscal first half ended September 30 grew +10.3% to €11.93 billion and operating profit soared +30.5% to +€979 million from +€750 million last year.

Net income for the three months ended September 30 was +€374 million, up +25.5% from +€298 million in the year-ago quarter, excluding a €419 million net capital gain in the year-ago period, generated by the sale of a stake in Amadeus. Revenues grew +8.8% to €6.13 billion, while operating expenses rose +8.9% to €5.56 billion, producing a three-month operating profit of +€568 million, up +7.8% over +€527 million in the year-ago quarter. Fuel costs in the quarter jumped +29% to €1.17 billion.

Fiscal second-quarter passenger yield lifted +4% to 8.63 euro cents as passenger (RASK) increased +4% to 7.26 euro cents and passenger (CASK) rose +3.1% to 6.40 euro cents. Cargo revenues for the three months improved +3.7% to €724 million.

"On the basis of robust traffic levels and forward bookings for the coming months, Air France (AFA)/(KLM) maintains its objective for the full year to generate a significant increase in operating income compared to 2005 - 2006 [operating income of +€936 million]," the company said.

Air France (AFA)/(KLM) said non-French shareholders increased their stake in the carrier to 47% over the past few weeks and stated that it will use an "authorized mechanism" to protect its traffic rights and "to safeguard national ownership once the nonresident shareholding has reached 45%." In its most recent "Connecting" letter to shareholders, (AFA)/(KLM) noted that it regularly conducts a process to identify its shareholders "in order to retain its traffic rights as well as its European Community (EC) air transport operating licenses." At June 30, French investors held more than 63.2% of the group while 36.3% of shareholders were not resident in France. French shareholders comprised employees (13.8%), institutional shareholders (19.1%), the state (18.6%), and individual shareholders (10.7%).

(KLM) will double the frequency on its Amsterdam to Moscow route from March 25th. The airline will then operate 2 daily flights using 737s.

Air France (AFA) Industries and (KLM) Engineering & Maintenance (E&M) are looking into uniting under one brand, (KLM) (E&M) VP Marketing, Sales & Customer Services, Rob Pruim said at the Maintenance Repair & Overhaul (MRO) Europe in Amsterdam. "We haven't taken any decision," he stressed, "but we have appointed consultants to see what the possibilities are. It's a delicate and difficult decision, because both Air France (AFA) Industries (AFI) and (KLM) Engineering & Maintenance are strong and recognized brands in the (MRO) market."

Meanwhile, both companies have started "full integration" of sales and customer support departments. "It's the next step in positioning ourselves as an (MRO) global leader," (AFI) VP Marketing & Sales, Christian Tallec noted. "Customers will have direct access to the combined portfolio of (AFI) or (KLM) (E&M) through a single point of contact, regardless of which entity carries out the maintenance."

SkyTeam carriers Aeromexico (AMX), Air France (AFA), Alitalia (ALI), and (KLM) have co-located their operations at Sao Paulo Guarulhos (GRU) Terminal 1, which the alliance said is the first co-location in its network where the participating airlines operate equally. A common-use ticket office and joint purchasing of ground handling services, also have been implemented. The alliance operates 75 weekly flights to and from (GRU).

Delta Airlines (DAL) will expand its codeshare relationship with (KLM) from December 1 by placing its code on (KLM) flights from Amsterdam to and from Bremen, Aberdeen, Luxembourg, Riga, Bergen, Stavanger and Newcastle.

Finnair (FIN) Technical Services signed a three-year general terms maintenance agreement with (KLM) for performance of airframe checks on the Dutch carrier's 10 MD-11s.

Air France (AFA)/(KLM) Group expects to decide this month, whether it will launch a new carrier focusing on the medium-haul leisure market.

The startup would be modeled on its Amsterdam-based transavia.com (TAV) subsidiary, which offers a mixture of charter and scheduled low-fare flights, and would be based at Paris Orly (ORY) South. It would operate a fleet of 186-seat 737-800s to a selection of popular tourist destinations such as Morocco, Tunisia and Spain.

"This initiative will meet with the demand for scheduled flights to leisure destinations not presently served by Air France (AFA)," the carrier said in a statement, noting that the initiative "would fit in very well with the growth strategy of transavia.com (TAV), which has for some time been planning to operate from additional bases outside the Netherlands." In addition to Air France (AFA) Soleil flights, as the project has been dubbed, transavia.com (TAV) would commence charter operations from (ORY). Transavia.com (TAV) denied press speculation that part of its fleet would be transferred to the new company.

The new airline would be a jointly owned subsidiary of Air France (AFA) (60%) and transavia.com (TAV) (40%). It would be registered in France and personnel would have a working contract under French labor law. Flights would be sold via tour operators and directly on a seat-only basis to customers in France and the destinations served. Direct sales would be undertaken via the transavia.com (TAV) website and its call center. Commencement of operations is planned for spring 2007.

The creation of a hybrid low-fare/charter airline by (AFA) is rather surprising considering management's longstanding resistance to the idea of an in-house Low Cost Carrier (LCC) to compete with Ryanair (RYR) and easyJet (EZY). (AFA) quit the charter segment in 1997, when it closed Air Charter.

Transavia, (TAV) launched in 1965 and which and has reported a profit for 28 consecutive years, has experimented with several models. In 2005 it merged its basiqair.com brand for low-fare flights and Transavia (TAV) for charter flights into transavia.com (TAV). It is a wholly owned subsidiary of (KLM) and operates 31 737NGs. In 2005 - 2006 it posted a net operating result of +€32 million/+$41 million on revenues of €468 million.

Later, Transavia.com (TAV)'s French equivalent will commence operations next summer with four leased 737-800s, following approval by the boards of Air France (AFA) and Transavia.com (TAV). Initial startup capital will be €22 million/$28.8 million, split 60/40 between Air France (AFA) and the Dutch Transavia.com (TAV). Lionel Guerin, currently Chairman and CEO of French regional airline, Airlinair, has been appointed Chairman of the management board. Management expects to achieve revenues of €250 - €300 million in the third year of operations and post a profit from the second year. Next summer, some 10 Mediterranean destinations (mainly Morocco, Tunisia, Spain, Italy and Egypt) will be served by 67 weekly flights out of Paris Orly. From winter 2007 - 2008, the number of destinations may increase to 15, while the fleet should grow to seven 186-seat 737-800s in the second year, and nine in the third.

The commercial brand will be Transavia.com "in order to take advantage of the existing brand, which already has a reputation for being a reliable, punctual and safe airline," according to a statement by the two shareholders, who added that "production costs and productivity must be consistent with the applicable fares and will benefit from the very substantial synergies achieved with Transavia.com (TAV) in the Netherlands." Management of the new carrier, which will be based at Orly, will be separate from (AFA). The airline should create some +400 new jobs by 2009, comprising 80 ground staff (MT) positions, 100 flightdeck crew (FC), and approximately 220 cabin crew (CA).

(KLM), as expected, appointed Deputy CEO and COO, Peter Hartman to take over from CEO, Leo van Wijk, who will step down at the close of the company's Annual General Meeting (AGM) on July 5, 2007. Hartman will be acting CEO as of April 1. He was appointed to the (KLM) board of Managing Directors in 1997, having joined the carrier in 1973 as a controller at Engineering & Maintenance. Van Wijk, 60, will continue to be involved in the management of Air France (AFA)/KLM) as Vice Chairman, (KLM) said. Last month, van Wijk indicated he likely will take a strategic role in the merged company upon conclusion of his (KLM) tenure. According to Dutch press reports, he will focus on the (M&A) activities of the holding.

(KLM) UK (AUK) Engineering opened an expanded maintenance hangar at Norwich International Airport. (KLM) invested £1 million in the facility, that now will be able to perform work on larger airplanes like 737NGs, and will add approximately +50 new jobs.

Boeing (TBC) revealed that (KLM) converted six options to firm orders for six 737-800s that will be delivered before mid-2008.

The firm order, previously listed by the manufacturer as "unidentified," is valued at $423 million. Boeing (TBC) said (KLM) plans to use the new planes to "replace several Classic 737s."

"In the current market environment, our customers want the most fuel-efficient products to keep their costs under control," said Marlin Dailey, Boeing Commercial Airplanes VP Sales Europe, Russia & Central Asia.

The 737-800 can seat up to 189 passengers. The manufacturer said it has logged 560 net orders for 737NGs so far this year. It also noted that (KLM) earlier this year converted an existing order for three 777-200ERs to three 777-300ERs.

December 2006: Air France (AFA)/(KLM) flew 15.54 billion (RPK)s passenger traffic in November, a +4.1% increase over the year-ago month. Capacity rose +4.2% to 19.8 billion (ASK)s and load factor dropped -0.1 point to 78.5% LF.

(KLM) will launch a second daily Amsterdam - Moscow Sheremetyevo service March 25 aboard a 737. Flights are in codeshare with Aeroflot (ARO). Starting March 26, Amsterdam - Los Angeles, increased to 9/week, using 777-200s, increasing to 10/week on May 2nd, increasing to 12/week on June 19th.

The Italian government confirmed its intention to reduce its controlling interest in Alitalia (ALI) in an effort to lift the carrier out of the red and into an alliance.

Since the initial part-privatization in December 2005, the Italian state holds 49.9%. It now wants to reduce this by 25% to 30%. "The strategic recovery of Alitalia (ALI) cannot be done without the entry in the company's capital of new industrial and financial partners," the office of Prime Minister, Romano Prodi said in a statement following a cabinet meeting. The government has yet to appoint advisers on the sale, but aims to complete it by January.

Alitalia (ALI) CEO, Giancarlo Cimoli told a parliamentary committee last week that the airline's future depends on a partnership. "The only strategic direction for Alitalia (ALI) is to integrate itself in a big international group," he said. Talk has centered on Air France (AFA)/(KLM), which holds a 2% stake, but several government officials have voiced disapproval of such a link-up and expressed their preference for a merger with another group or carrier, mentioning Air China (BEJ), Lufthansa (DLH), Thai Airways (TII), and Emirates (EAD). (ALI) dismissed reports some weeks ago, that it was in talks with Thai (TII).

(AFA)/(KLM) CEO, Jean-Cyril Spinetta said last month that "exploratory" talks were underway, but reiterated that Alitalia (ALI) must improve its finances before (AFA) would consider increasing its current stake. The Italian carrier wanted to be part of the initial Air France (AFA)/(KLM) merger in 2004, but was excluded because of its poor financial health and government ownership.

Boeing (TBC) said that (KLM) exercised three 737-800 options and ordered a fourth 777-300ER. The narrowbodies, worth $212 million at list prices, will be powered by (CFM56-7)s and delivered in 2008. The 777 will be powered by the (GE-90).

A330-203 (801, PH-AOF), delivery.

January 2007: Air France (AFA)/(KLM) flew 16.12 billion (RPK)s passenger traffic in December, a +3.3% rise from the year-ago month. Capacity was up +3.8% to 20.29 billion (ASK)s, dropping load factor -0.4 point to 79.4% LF.

2006 (AFA)/(KLM) had 197.48 billion (RPK)s passenger traffic (+6.3%) (world 2nd highest); 11.01 billion (FTK)s; & 72.73 million passengers (+5.2%).

Air France (AFA)/(KLM) is actively pursuing its co-location strategy, opening a joint office in Brussels, from where a single management team will oversee operations in Belgium and Luxembourg. A joint office is scheduled to open this week in Israel, while the possibility of implementing a similar structure in Germany and Great Britain is being studied. "We are committed to move ahead with this co-location/joint management strategy, unless there are some legal and practical restraints," (KLM) Senior VP & Area Manager Benelux, Bram Graber said. "We have a very pragmatic approach and we don't apply a standard, one-fits-all model."

About a year after the spring 2004 merger, the group carefully started testing joint management and appointed a single manager for Brazil, the Andean countries (Colombia, Ecuador, Peru, Venezuela) and the Dutch Caribbean. From April 2006, seven new regional divisions are being managed jointly: Iberian peninsula, Scandinavia/Finland/Baltic states, Belgium/Luxembourg, Indochina (Cambodia, Laos, Myanmar, Philippines, Thailand, Vietnam), Southeast Asia and Australia (Singapore, Malaysia, Brunei, Indonesia, Australia), Japan and South Africa. "The goal is to optimize the implementation of commercial synergies, to ease the decision-making process and to exchange views on a joint dynamic," (AFA) Senior VP Europe & North Africa, Etienne Rachou explained, adding that customers as well as Air France (AFA) and (KLM) teams "largely approve of this management principle, which has produced some very satisfactory results."

(KLM) Engineering & Maintenance was selected by TNT Airways (TNB) to work on its two 747-400ER freighters. The contract covers engineering, maintenance control and component services, as well as worldwide line and airframe maintenance, including "A" and "C" checks.

Martinair (MTH) signed a three-year Total Care Support contract with (KLM) Engineering & Maintenance covering four 747-400BCFs.

(KLM) will invest more than €100 million/$132.5 million in the next two years to equip some 130 airplanes with a "fresher, more modern interior." It also will repaint the Fokkers flying for KLM cityhopper in the mainline livery. New Koito lie-flat seats, which boast on-demand entertainment and in-seat power, will be installed in World Business Class (C) aboard (KLM)'s 22 747-400s and 10 MD-11s, bringing them in line with its new 777s and A330s. TV screens aboard 747s will be replaced with Matsushita/Panasonic LCD screens. Economy (Y) seats in the MD-11 fleet will be renewed and eventually equipped with on-demand InFlight Entertainment (IFE). Interiors will be reconfigured from 2-4-3 to 3-3-3 seating.

(KLM)'s 45-strong 737 fleet already has been fitted with new interiors and its 18 737-800s/-900s have been equipped with the lighter Recaro 3510 seat. The relatively new seats removed from the 737NGs will be installed on 22 of 27 737-300s/-400s, with the remaining five getting the Recaro seat. In addition, the Europe Select cabin will be standardized by adjusting seat configuration aboard the 737-900s to match the 3-3 layout of the 737-300s, 737-400s and 737-800s.

777-206ER (35295, PH-BQO "Old Rauma"), delivery. 1 order A330-200, (ILF) 6 year leased.

February 2007: Air France (AFA)/(KLM) flew 16.12 billion (RPK)s passenger traffic in January, up +2.3% from the year-ago month. Capacity rose +2.4% to 20. 4 billion (ASK)s and load factor was level at 79% LF.

Citing "dynamic" passenger activity, "buoyant unit revenues" and a "favorable economic backdrop" that included a drop in oil prices to year-ago levels, Air France (AFA)/(KLM) Group reported that its net profit tripled to +€229 million/+$297.4 million for the fiscal third quarter ended December 31 from €77 million in the year-ago period.

Group revenue rose +5.9% to €5.75 billion and operating costs were up +5% to €5.5 billion, or +4.2% excluding fuel. The fuel bill rose +8.3% to €1.08 billion. Operating income of +€252 million jumped +32.6% over the +€190 million in the year-ago period. Passenger revenue climbed +7.1% to €4.52 billion and operating income from (AFA)/(KLM)'s passenger business soared +69.7% to €168 million.

Three-month passenger traffic rose +4.3% against a +4.7% lift in capacity, dropping load factor -0.3 point to 79.8% LF. Yields increased +3% to €8.76 cents and unit revenues were up +2.6% to €6.99 cents. Unit costs grew just +1.2% to €6.63 cents.

In the nine-month period, (AFA)/(KLM) earned +€847 million, down -6.5% from a +€906 million profit in the year-ago period, that was boosted by the sale of its stake in Amadeus. Revenues rose +8.8% to €17.68 billion, operating charges were up +7.5% to €16.45 billion, and operating income of €1.23 billion was ahead +31% on the prior-year period.

The group said it is targeting a breakeven fourth quarter, "thereby confirming the very strong results for the full year 2006 - 2007."

Air France (AFA) Industries/(KLM) Engineering & Maintenance appointed Jonathan Soesman VP Sales, USA & Canada.

Air France (AFA)/(KLM) Group will increase summer schedule capacity +5.4% year-over-year, including a +5.6% hike on the long-haul network and +4.3% on medium-haul. Long-haul increase will include +11.4% growth to Latin America, +7.3% to Asia, and +10.1% to North America, owing mainly to the launch of new daily Paris Charles de Gaulle - Seattle service on June 11 aboard an A330-200. (AFA)'s domestic network will see only a +0.2% ASK increase.

(KLM) and Malaysia Airlines (MAS) are strengthening their codeshare cooperation to include (MAS) flights from Kuala Lumpur to Penang, Langkawi and Kota Kinabalu. (KLM) passengers arriving from Amsterdam will have access to the flights from March 1.

Continental Airlines (CAL) became the eighth carrier to have its cargo booking system go live on the Unisys-operated Cargo Portal Services (CPS), a Web-based booking tool used by more than 2,500 freight forwarders. "Our customers want choice and convenience. (CPS) fills this need because of its rapid adoption by forwarders, its multicarrier model and its capability to handle virtually all types of cargo products," (CAL) VP Cargo, Jack Boisen said. (CAL) joins American Airlines (AAL), Air Canada (ACN), Air France (AFA)/(KLM), Austrian Airlines (AUL), Northwest Airlines (NWA), Scandinavian Airlines (SAS), and United Airlines (UAL) on (CPS).

Both airlines are pursuing fleet modernization programs. By June, the entire (AFA) long-haul fleet will be equipped with new interiors. Flights to the French Caribbean and Reunion now are operated with new 777-300ERs, replacing 747-400s. Remaining 737s are being phased out of the narrowbody fleet, which will be made up exclusively of A320 family airplanes. (KLM) will have finalized an important part of its fleet renewal program at the start of the summer season, by replacing 767-300ERs with new A330-200s, while the first phase of its MD-11 interior modification has been concluded. The second part of the cabin upgrade, which will begin this fall, will entail putting lie-flat seats in business class (C) and installing the same inflight entertainment system as on its A330-200s and 777-200s.

747-406ERF (35233, PH-CKD), wet-leased to Air France (AFA) at delivery. 767-306ER (27612, PH-BZI), returned to (ILF), and leased to Air Astana (AKZ).

March 2007: Air France (AFA)/(KLM) flew 14.41 billion (RPK)s passenger traffic in February, up +3.5% from the year-ago month. Capacity rose +1.9% to 18.28 billion (ASK)s, lifting load factor +1.2 points to 78.9% LF.

(KLM) appointed Marc Lammens, VP Commercial Strategies, effective April 1. Welmer Blom succeeds Lammens as Director Sales & Services at (KLM) The Netherlands. (KLM) Engineering & Maintenance appointed former Sabena Technics (SAB) President & CEO, Peter de Swert as Senior VP Operations.

(KLM) launched six-times-weekly, nonstop Amsterdam - Lima service Sunday aboard 777-200ERs, becoming daily December 1. Currently, the Lima service was via Bonaire aboard MD-11s.

737-8K2 (30370, PH-BXV), delivery.

April 2007: Air France (AFA)/(KLM) flew 17.13 billion (RPK)s passenger traffic in March, up +7.5% on the year-ago month. Capacity rose +3.8% to 20.83 billion (ASK)s, lifting load factor +2.8 points to 82.3% LF.

Amadeus said (KLM), Kenya Airways (KEN), and Martinair (MTH) successfully switched to Altea Reservation. More than >1.4 million PNRs migrated to Amadeus and 22 applications were adapted as part of the cutover. "By now using the same reservation system as Air France (AFA), this migration represents an important step in realizing common Information Technology (IT) platforms and applications between Air France (AFA) and (KLM)," (KLM) Executive VP & Chief Information Officer (CIO), Boet Kreiken said.

The Association of European Airlines (AEA) released members' punctuality and baggage-handling performance for 2006, revealing the majors' ongoing luggage-related difficulties. British Airways (BAB) was the worst-performing of the 24 reporting carriers with 23 missing bags per 1,000 passengers. (TAP) Portugal was 23rd, with 21 missing bags, Lufthansa (DLH) 22nd with 18.1 and Air France (AFA) 21st with 16.6. Top-ranked carrier was Air Malta (MLT) with 4.4 missing bags per 1,000 passengers. Turkish Airlines (THY) (4.7) and Air One (ADH) (8.1) rounded out the top three. Six carriers did not report. The 24 reporting airlines posted an average 15.7 missing bags per 1,000 passengers. Best short-/medium-haul ontime arrival performance was Luxair (LUX)'s 89.6%, followed by SN Brussels Airlines (DAT) (87%) and (KLM) (86.6%). Cyprus Airways (CYP) was worst at 68.9%, just below Air One (ADH)'s 70.1%. Icelandair (ICE) enjoyed a 100% completion factor while Olympic Airlines (OLY) cancelled a high 3.2% of its flights. (AEA)'s overall short-/medium-haul ontime arrival performance was 77.9% with a 98.5% completion factor. (KLM) posted the best long-haul ontime arrival performance with 79.9%, with Austrian Airlines (AUL) (77.4%) second and Finnair (FIN) (76.3%) third. Spanair (SPP)'s 37.3% was the worst. Icelandair (ICE) was the only airline to operate 100% of its scheduled flights, while bmi (BMA) led reporting carriers with a cancellation rate of 3.8%. Overall, (AEA) carriers' long-haul flights arrived ontime at a 66.3% rate with 0.5% cancelled.

777-206ER (32721, PH-BQP "Pont Du Gard"), (ILF) leased.

May 2007: Air France (AFA)/(KLM) flew 17 billion (RPK)s passenger traffic in April, a +3.1% increase from the year-ago month. Capacity was up +4.1% to 20.67 billion (ASK)s, dropping load factor -0.8 point to 82.3% LF.

Air France (AFA)/(KLM)'s -2.4% decline in consolidated net earnings to +€891 million/+$1.2 billion in the fiscal year ended March 31, which compares to a +€913 million prior-year profit boosted by the sale of its Amadeus stake, will not slow the airline, which yesterday announced an airplane commitment worth approximately $7 billion. The orders, to be signed at the Paris Air Show, comprise the firming of two A380 options, which Chairman & CEO, Jean-Cyril Spinetta were "part of an agreement with Airbus (EDS) relating to compensation for [A380] delivery delays," plus 30 A320 family airplanes and 18 777-300s.

The earnings drop belies the company's growth. Excluding the +€419 million net capital gain on the Amadeus sale, earnings rose +80% year-over-year. Group revenue climbed +7.6% to €23.07 billion and operating costs rose +6.4% to €21.83 billion. Operating profit jumped +32.5% to +€1.24 billion from +€936 million a year earlier.
"This past year has demonstrated the benefits of our profitable growth strategy," Spinetta said. "We have taken advantage of global growth to develop our business in all major markets and increase our profitability through cost control, while continuing to invest in our future." He added that the first phase of the merger resulted in "significant value creation for both the group and its shareholders" and that the current phase will see a deeper integration of the group's strategic functions. "This will enable us to further enhance our profitability, with a target return on capital employed of 8.5% by 2009 to 2010." (ROCE) for the reporting Fiscal Year (FY) was 6.5%, up +1.3 points, and is expected to reach 7% in the current financial year.

Full-year traffic rose +5.4% against a +4.4% increase in capacity, lifting load factor +0.6 point to 81.4% LF. The company carried 73.5 million passengers, up +5%, and generated passenger revenue of €18.37 billion, up +8.4%. Operating income soared +55.5% to €1.07 billion. Yield increased +3.4% to €0.087, (RASK) rose +4.4% to €0.071 and unit cost grew just +2.6% to €0.066.

Fourth-quarter net profit surged to +€43 million from +€7 million in the year-ago period. Revenues lifted +3.7% to €5.39 billion and operating costs were up +3.4%. Operating result swung to a +€49 million profit from the year-ago quarter's -€4 million loss.

The group is targeting a capacity increase of about +5% this year. It expects a "slight" rise in unit revenue and a further improvement in operating income. The new cost-saving program "Challenge 10" should generate savings of -€560 million this year and -€1.4 billion over a three-year period.

Air France (AFA)/(KLM) will be changing its top management structure, in line with increasing integration between the two airlines and marking the conclusion of the three-year phase-in period following their merger in May 2004. The group now will be managed by an executive committee consisting of eight members, each representing an operational division across both airlines. This replaces the existing strategic management committee, comprising four members from each carrier, which meets every two weeks alternating between Paris and Amsterdam and makes decisions relating to coordination of the networks and hubs, medium-term budgets, investments and fleet plans as well as alliances. "The strategic management committee members represented a company; those of the executive committee will represent a function," a spokesperson said, stressing that the group will "remain faithful to the principle of one group-two airlines, but we will become more reactive" and that the changes fit within a legal a framework established as part of the merger. The framework contains two main elements: A three-year agreement and a 2004 to 2012 accord covering traffic rights, preservation of the (KLM) brand, balanced development of the two hubs of Amsterdam Schiphol and Paris Charles de Gaulle, plus a fair division of the management positions.
Under the terms of the agreement, Air France (AFA) is allowed at the end of the initial phase, to increase its representation on (KLM)'s supervisory board from four to five of the nine seats, on group level to evolve the strategic management committee into a more functional management committee and to dissolve the Dutch foundations, which were created to safeguard the Dutch nationality of (KLM). While the first two elements will take place, the last will remain untouched.
The eight divisional director posts will be shared "equitably" between Air France (AFA) and (KLM) executives. They comprise finance, cargo, international sales, revenue management, pricing and sales, purchasing and fleet, Information Technology (IT), Maintenance R4epair & Overhaul (MRO) (only marketing and strategy) and the French market. They do not include flight or hub operations and Human Resources (HR). The new executive committee will be put in place by the beginning of summer.

(KLM) launched a trial on long-haul routes to Singapore, Manila and Curacao to charge passengers for seats with more legroom or on an exit row, Reuters reported. The charge is €50/$67.71 per "extra," the airline said.

China Southern Airlines (GUN) and Air France (AFA)/(KLM) have entered into exclusive talks to launch a joint venture (JV) cargo carrier in China, (AFA)/(KLM) Vice Chairman & (KLM) President & CEO, Leo van Wijk revealed recently in Beijing. China Southern (GUN) previously said it expects to launch a cargo (JV) by the end of 2007. The carriers currently are negotiating ownership share and where to base the (JV). Earlier this year, China Southern (GUN) Vice Managing Director, Xu Jiebo said a foreign airline would hold a 49% stake in a cargo (JV), the maximum allowable foreign investment under (CAAC) (CAC) regulations. "As an important member of SkyTeam (STM), Air France (AFA)/(KLM) is one of the Western carriers we are in talks with," he acknowledged at the time.

Beijing has been encouraging foreign airlines with worldwide networks to launch cargo ventures with Chinese carriers as the nation's production of export goods continues to accelerate rapidly. Air China (BEJ) last month unveiled details of a cargo airline it plans to operate in partnership with Cathay Pacific Airways (CAT); Lufthansa (DLH) and Shenzhen Airlines (SHZ) launched Jade Cargo International (JDC) last year, and Korean Air (KAL) intends to launch a (JV) cargo carrier with Chinese logistics firm Sinotrans this year.

China Southern (GUN) boasts an extensive network in Southeast Asia, which is why it likely would have little interest in launching a cargo entity with an Asia/Pacific airline, industry analysts point out. But a formidable Western carrier such as (AFA)/(KLM) would expand its cargo reach to Europe and the USA. "So far, no specific scheme has been fixed, but this joint venture will be launched most probably this year," a source familiar with the negotiations said.

Lufthansa (DLH) Systems said Spanair (SPP) will implement its ProfitLine/Yield Rembrandt solution to optimize further its revenue management processes. It also said (KLM) extended its existing contract to support its flight planning processes with Lido OC for an additional five years. (KLM) also selected the Lido module LinTop to calculate single-point takeoff performances, replacing the paper-based charts it previously used.

(KLM) named Executive VP Corporate Center, Jan Ernst de Groot as one of three Managing Directors, effective July 5. Other Managing Directors are new President & CEO, Peter Hartman, and CFO, Frederic Gagey. (KLM) appointed Elfrieke van Galen, Senior VP Corporate Communications & Corporate Social Responsibility.

A330-203 (834, PH-AOK), (ILF) leased.

June 2007: Air France (AFA)/(KLM) flew 16.81 billion (RPK)s passenger traffic in May, up +3.9% from the year-ago month. Capacity rose at the same rate to 21.26 billion (ASK)s, leaving load factor level at 79.1% LF.

(KLM) Engineering & Maintenance (E&M) Executive VP, Peter Somers said at the Paris Air Show that Air France (AFA) Industries (AFI) and (KLM) (M&E) intend to increase their collective profile among the world's largest Maintenance Repair & Overhaul (MRO) providers, and narrow the gap with Lufthansa (DLH) Technik (LTK), through both the addition of new capabilities and acquisitions. "Several of (KLM) (E&M)'s present customers and/or (KLM) alliance partners [such as Northwest Airlines (NWA) and Kenya Airways (KEN)] have ordered the 787 Dreamliner and they have approached us to see if can support them. We have presented a business case [to the board] supporting the addition of 787 capability," Somers said.

Neither Air France (AFA), nor (KLM) have placed orders for the 787, but insiders said that the Dutch carrier is interested as it looks toward replacing its MD-11s. The group also is analyzing the possibility of adding (MRO) capability for the 747-8. "Again, many of (KLM) (E&M) customers committed to the 747-8, so it's almost unavoidable not to extend our range with this airplane type," he said. Regarding acquisitions, Somers said, "Yes, it is part of our growth strategy. We want to be a major player in the (MRO) scene, worldwide. Also, there is a customer demand for proximity and for low-cost solutions." An announcement regarding an acquisition is expected in the "near future," he revealed, and "indeed, you can assume it will not be in Europe." (AFI) and (KLM) (E&M) reported turnover of €2.86 billion/$3.84 billion for the fiscal year ended March 31, up +6.6% from the prior year. Work for third-party customers contributed 34% of the total.

Air France (AFA)/(KLM) Group's Maintenance Repair & Overhaul (MRO) division inked two new contracts. Air France (AFA) Industries (AFI) signed an agreement with IndiGo (IGO) for support of its fleet of A320s covering door-to-door logistics support, pool access, repair management and dedicated on-site management in support of the airline's operations throughout India.

(KLM) Engineering and Maintenance (E&M) signed a five-year material agreement with (GE) Aviation to support its (CF6-50) engine overhaul operation. The agreement includes both new and used material, that will be used on (CF6-50)s overhauled at (KLM) (E&M).

Amsterdam Airport Schiphol (AMS) will need a sixth runway to accommodate its anticipated growth, Schiphol Group indicated in its long-term outlook. (AMS) expects passenger throughput to grow +84.4% to 85 million by 2025, with freight more than doubling to 3.5 million tonnes. Runway capacity will need to increase from last year's 423,122 flights to 600,000 to 650,000 by 2025, with a new passenger area constructed by 2015, the airport said. The plan also calls for more selective use of nighttime capacity, and a slot policy prioritizing "scarce capacity in favor of hub carriers, [intercontinental] carriers and those point-to-point carriers that contribute to the European network, and to safeguard the intercontinental network." The report further suggests "providing relief" for (AMS) by taking outbound transfer traffic not tied to the main port, and relocating as much as possible to other Dutch airports. It said regional airports like Eindhoven and Lelystad, may be suitable options. Schiphol Group has a 51% share of Eindhoven and fully owns Lelystad.

Air France (AFA)/(KLM) is seeking full control of Amsterdam-based Martinair (MTH) and has begun lobbying the European Commission (EC) to obtain clearance for a 100% holding, according to widespread reports from the Netherlands. Martinair (MTH) is owned jointly by (KLM) and Danish shipping group Moeller-Maersk. (KLM) initially launched a bid in 1998 but was rebuffed by the (EC), which also imposed a fine equal to €40,000/$53,474 on the Dutch flag carrier for supplying incorrect and misleading information regarding transavia.com (TAV), the Low Cost Carrier (LCC) that operates as an independent subsidiary of (AFA)/(KLM). The company's new plan involves integrating Martinair (MTH)'s cargo activities into its own operation, while incorporating (MTH)'s European charter business into transavia (TAV), De Telegraaf reported. (MTH) would focus on long-haul charters. It posted a -€7 million loss in 2006, reversed from a profit of +€14 million in 2005, as both its cargo and passenger activities were impacted by high fuel prices.

(KLM) appointed Paul Elich, Executive VP Ground Services, effective July 1. He will succeed Frank de Reij, who will become Project Leader Procurement for Air France (AFA)/(KLM). Marjan Rintel will succeed Elich as VP-Hub Operations.

SkyTeam (STM) members Air France (AFA), Alitalia (ALI), (CSA) Czech Airlines, Delta Air Lines (DAL), (KLM) and Northwest Airlines (NWA) filed an application with the USA Dept of Transportation seeking antitrust immunity on transatlantic routings. The carriers withdrew their previous application in January 2006 after the Dept of Transportation (DOT) issued a tentative decision denying the request. Delta (DAL) currently has antitrust immunity with Air France (AFA), (ALI) and (CSA), while Northwest (NWA) has antitrust immunity with (KLM).

"Included in the application is a joint venture agreement between Air France (AFA), Delta (DAL), (KLM) and Northwest (NWA), that would create a comprehensive and integrated partnership among the four SkyTeam (STM) members across the Atlantic," Northwest (NWA) said in a statement. "A more integrated SkyTeam (STM) alliance offers significant advantages to consumers, including more choice in flight schedules, travel times, services and fares." The carriers are attempting to take advantage of route opportunities made possible in the (EU) - USA "open skies" accord that goes into effect next year.

At the Paris Air Show, the Air France (AFA)/(KLM) Group ordered nine 777-300ERs and seven 737-700s in a deal valued at $2.7 billion, marking the first time the combined airline has announced an airplane acquisition at the group level. (KLM) will operate the 737-700s, while the 777-300ERs will be added to (AFA)'s existing fleet of 46 777s. (AFA) took options on another seven 777-300ERs, while (KLM) took the same number of options on 737-700s. The 777-300ER order takes the total number of 777s sold to more than >960.

July 2007: (KLM) signed an agreement with Wereld Natuur Fonds (the Dutch branch of the World Wildlife Fund) to "achieve CO2-neutral growth in comparison with 2007" by offsetting approximately 4 million tons of carbon dioxide emissions in the next four years through "emission reduction and compensation." (KLM) said the agreement is the first of its kind in the industry. Through fleet modernization and reduced fuel consumption, (KLM) said it will reduce emissions per passenger by -3% by 2012 (the year after (EU) airlines are included in the continent's emissions trading scheme) and by -17% in 2020. "Our ambitions certainly are optimistic, and (KLM) has its sights set on staying ahead of the pack. We are convinced that our customers will react with enthusiasm," President & (CEO), Peter Hartman said.

Compensation will take place through the airline's participation in sustainable energy projects without CO2 emissions, that are organized "largely in development countries."

The Carlyle Group, a private equity firm, reached a definitive agreement to acquire (ARINC) from its current shareholders, which include more than a dozen major airlines and Boeing (TBC). (ARINC), which generates more than >$900 million in annual revenue, specializes in transportation communications technology, and its Air Traffic Control (ATC) support systems are used by carriers and airports throughout the world. Primary shareholders in the 77-year-old company based in Annapolis, include American Airlines (AAL), United Airlines (UAL), Delta Air Lines (DAL), Continental Airlines (CAL), Northwest Airlines (NWA), US Airways (AMW)/(USA), Air Canada (ACN), Air France (AFA)/(KLM), Lufthansa (DLH), British Airways (BAB), Mexicana (CMA), Swiss International Air Lines (CSR), TACA (TAC), FedEx (FED), Hawaiian Airlines (HWI), and Philippine Airlines (PAL).

2006 Results: (AFA)/(KLM) is world #2 airline by passenger operations ranked by traffic: 199.51 billion (RPK) (+5.4%); 245.07 billion (ASK) capacity (+4.4%); 81.4% LF (+0.8); 73.5 million passengers (+5.0%); 103,050 employees (+0.6%); 10.99 billion (RTK) (+1.4%) cargo traffic; 363 airplanes (see link to world airline (RPK) comparison chart).

(AFA)/(KLM) Group subsidiaries Regional and KLM Cityhopper placed a joint order for 20 EMB-170/190 airplanes plus 18 options. The group said the combined order "will lead to substantial synergies both in the purchasing of airplanes, engines and spare parts and in fleet management, operational maintenance and crew training." Regional will take six EMB-170s and four EMB-190s and Cityhopper will take 10 EMB-190s and replace its oldest F 100s. Deliveries are scheduled between 2008 and 2011. Regional flies to 46 destinations with a fleet of 28 ERJ-145s, nine ERJ-135s, seven ERJ-120s, three ERJ-190s, nine F 100s and five F 70s. Cityhopper operates 55 airplanes.

September 2007: (KLM) will launch daily Amsterdam - Dallas/Ft Worth service aboard A330-200s from March 30.

(KLM) said e-tickets now are available for all 124 destinations in its network, and its e-tickets can be used when flying with 72 interline partners. At present, e-tickets account for around 89% of all (KLM) tickets. It intends to raise this to 100% by January 1, when it will begin issuing e-tickets only. Paper tickets will be available on request, but it will impose a surcharge on issuance.

The (AFA)/(KLM) Group intends to make Paris Charles de Gaulle (CDG) the premier hub in Europe, in order to give the company a competitive edge in customer service. "There will be a rebirth [of] (AFA) through this hub," (AFA)/(KLM) Chairman & (CEO), Jean-Cyril Spinetta said. "We want (CDG) to become a world leader in transportation." Spinetta outlined plans, including the role of the S3 Terminal that opened in June, that include a complete reengineering of passenger processing through new technology that will make (CDG) a "digital airport." A new baggage handling system is being added that will incorporate (RFID), online and kiosk check-in systems will be expanded, and a pilot program will be implemented by year end, testing the use of biometrics to issue boarding passes.

In November, (AFA) will start phasing in a new In-Flight Entertainment (IFE) system, featuring 85 films in nine languages on long-haul flights. It also plans to begin a pilot program to permit the use of mobile phones during flights.

S3 connects to Terminal 2E with an automated people-mover and eventually will accommodate (AFA)'s 12 A380s, that are scheduled to begin arriving in 2009. Bi-level boarding bridges have been installed and there will be six parking stands for the behemoth airplane. Spinetta said the A380s will be used on routes to Singapore, Hong Kong, Tokyo and "most likely Beijing." A new terminal scheduled to open next year, will be dedicated to handling (AFA)'s regional traffic. A second satellite, S4, will open in 2012 with capacity for 7.2 million passengers.

Spinetta said (AFA) will continue its "Dedicate" service, which offers dedicated business class (C) flights from Paris to a number of oil-producing regions with specially configured A319s, but there currently are no plans to follow in the footsteps of MaxJet (MXJ) or Eos (EOS), which provide all-business-class (C) service between Europe and the USA. "Today, what we aim to do, is to improve the quality of our operation," he said. "That's clearly our ambition."

(AFA)/(KLM) is studying a potential merger with either Alitalia (ALI) or Iberia (IBE), Chairman & (CEO), Jean-Cyril Spinetta said. Spinetta confirmed that the group is exploring merger opportunities. He said (AFA)/(KLM) has held "informal" talks with potential Spanish financial partners, though it is not yet in official discussions with (IBE). "(IBE) is in good shape, but I understand that the shareholders and management think that consolidation is inevitable, and that it is better to anticipate in this, than to wait and have to act in a more difficult situation," Spinetta said. "We are in the phase of evaluating the potential for cooperation with (IBE)." He explained that (AFA)/(KLM) declined to participate in the failed auction earlier this year for the Italian government's stake in Alitalia (ALI), because it did not believe the terms and conditions set for the sale were viable. But the situation has changed with the appointment of a management team led by Maurizio Prato, who initiated a new restructuring effort and has been asked by the government to sell the state's 49.9% stake, he said.

(AFA)/(KLM) is preparing to launch a bid for (IBE), in conjunction with several Spanish companies, Madrid's "Expansion" newspaper reported.

October 2007: Air France (AFA)/(KLM) Group estimated the net impact on operating income associated with the recently concluded five-day strike by (AFA) cabin crew (CA) at some -€60 million/-$86.5 million. The figure reflects a -€80 million loss in revenue, offset by a -€20 million reduction in costs, linked mainly to fuel. (AFA) cabin staff (CA) were on strike October 25 to 29 over pay and working conditions. (AFA)/(KLM)'s flight schedule has returned to normal. Management and cabin crew (CA) unions agreed to a series of 20 meetings to negotiate salaries and working conditions between now and Christmas.

SkyTeam (STM) Alliance partners (AFA)/(KLM) and Delta Air Lines (DAL) announced a wide-ranging agreement on the joint operation of transatlantic flights, including a number of flights from London Heathrow (LHR) to USA destinations, as the carriers seek to challenge British Airways (BAB) directly, when the (EU)-USA "open skies" accord takes effect at the end of March. (DAL) executives conducted their third-quarter earnings conference call from Paris and promised a major announcement in conjunction with (AFA)/(KLM). (DAL) (CEO), Richard Anderson spoke of the "enormous amount of value" resulting from "the opportunity we have with (AFA) across the transatlantic." He noted that (DAL) and (AFA) enjoy antitrust immunity. According to several analyst reports, the new transatlantic plans involve flights under the (AFA) code from (LHR) to nine USA destinations, including a Los Angeles service operated by (AFA). Currently, (DAL) does not have the right under Bermuda II to operate transatlantic flights to and from (LHR). (AFA)/(KLM) and (DAL) also reportedly plan to launch a daily Paris Orly - New York (JFK) service next summer.

(KLM) and Copa Airlines (COP) signed a code share agreement covering flights beyond their Amsterdam and Panama City hubs effective March 30. (KLM) will launch thrice-weekly service between the hubs that day.

(KLM) Engineering and Maintenance signed a five-year component maintenance and availability contract covering BRA Transportes Aereos (BRW)'s eight 737s.

November 2007: (KLM) placed orders for three 737-700s, two 777-300ERs, and two A330-200s, all of which will be delivered in 2010 to 2011. The Boeing (TBC) order, worth around $716 million at list prices, includes options for one 737 and two 777s. (KLM) now has six 777-300ERs on order and will take delivery of its first next quarter. The A330s will be powered by (CF6-80E)s and seat 251 passengers. (KLM) will operate 12 of the type, after taking delivery of the newly ordered planes.

(KLM) Engineering & Maintenance (E&M) was contracted by Pegasus Airlines (PGS) to overhaul five (CFM56-7B)s plus two options. (KLM) E&M will provide two leased engines to (PGS) as part of the deal.

Seven cargo airlines working in conjunction with (IATA) (ITA) and freight forwarders, initiated e-freight pilot programs on a number of selected trade routes. The airlines are Air Canada (ACN), British Airways (BAB), Cathay Pacific (CAT), (KLM), Martinair (MTH), (SAS), and Singapore Airlines (SQC). Cargo on key trade routes connecting the countries represented by the carriers, will be processed electronically. "The paper-free era for airfreight begins," (IATA) (ITA) Director General & (CEO), Giovanni Bisignani said. "This first wave of pilots will pave the way for a global rollout of e-freight that will eliminate the paper that costs this industry $1.2 billion every year. Combined, these documents could fill 39 747F cargo freighters each year, making e-freight a win for the business and for the environment." Participating freight forwarders in the e-freight pilot program are (DHL) Global Forwarding, Panalpina, Kuehne+Nagel, Schenker, TMI Group-Roadair, and Jetspeed. The potential impact of the increased efficiency in air cargo is expected to have "very broad implications across the global economy," Bisignani claimed. (AFA)/(KLM) said that based on its "experiences at [Amsterdam] Schiphol, we hope to introduce e-freight shipments on the [Paris] Charles de Gaulle network at a later stage" and that it is targeting 50% e-freight penetration on "important trade lanes" within five years.

(KLM) has ordered Aviation Partners Boeing (APB) winglets for its 737-900s. (APB) said (EASA) certification is expected in early 2008.

December 2007: Ryanair (RYR) called on the European Commission (EC) to block Air France (AFA)/(KLM) from buying Alitalia (ALI) "until both airlines have paid back a combined €2.7 billion/$3.9 billion in illegal state aid received from the French and Italian governments." (RYR) filed documents in the European Court of First Instance stating that the (EC) has failed to act on a complaint it submitted 18 months ago alleging "€1 billion worth of state aid to (AFA) in the form of unlawful reduced domestic airport charges." It also previously lodged a similar complaint with the (EC) claiming that (ALI) had received "€1.7 billion [in] illegal state aid . . . in the form of debt writeoffs." (RYR) said that "despite these flagrant breaches of state aid rules, the (EC) has failed to act on either case in the last two years."

The Alitalia (ALI) board is scheduled to meet to discuss bids by (AFA)/(KLM), Air One (ADH)/AP Holding, and a consortium led by an Italian attorney. The company said that "at the end of the . . . meeting, a press release will be issued announcing the decisions taken." (AFA)/(KLM) Chairman, Jean-Cyril Spinetta promised in Milan that his company's bid does not include cuts at the loss-making flag carrier. "Our plan is a plan for development and growth, certainly not a plan, that consists of reducing the size of (ALI)," he said, according to "Thomson Financial," adding that (AFA)/(KLM)'s intention "is certainly not to turn (ALI) into a regional company."

In anticipation of the decision of the (ALI) board on the bidder with which (ALI) will enter exclusive talks for sale of the government's 49.9% stake, (AFA)/(KLM) and Air One (ADH) each outlined their plans for (ALI). (AFA)/(KLM)'s nonbinding offer includes purchase of 100% of the shares of (ALI) through an exchange offer and 100% of its convertible bonds (although it failed to mention its share price offer) in addition to an immediate injection of "at least" €750 million/$1.08 billion through a capital increase open to all shareholders and to be fully underwritten by the group. It stressed that it is committed to reposition (ALI) "as a strong national flag carrier with world coverage" and said a large part of its investment will be used to upgrade cabin comfort and ground services. It will renew (ALI)'s MD-80 short/medium-haul fleet, as well as its 767 long-haul fleet. "After the recovery phase, further investments will ensure the growth of the fleet and enable (ALI) to expand its network from a healthy position," (AFA)/(KLM) said. It also said its recovery and re-launch plan will not add any more job cuts to (ALI)'s current plan, which reportedly foresees some -1,700 redundancies.

AP Holding, which controls Italy's largest privately held carrier, Air One (ADH), said it offered €0.01 per share and plans a total investment of €5.3 billion by 2012, encompassing a capital increase of at least €1 billion and €3 billion for the purchase of 130 new airplanes (90 A320s, 20 A330s and 20 regional airplanes). It would re-launch the (ALI) brand and pledged that the new airline "will immediately become the fourth [largest] European full-service operator." (ADH) anticipates that integration of the two carriers will lead to a nearly -€900 million reduction in operating costs owing to the synergy between the two networks, a new operating model with six domestic bases (Milan, Rome, Catania, Venice, Naples, Turin), consolidation of (ALI) Servizi and (ADH) Technic and other initiatives. Its plan anticipates that some 2,750 employees of (ALI) Fly, the airline entity, will be affected by the restructuring along with 1,050 at (ALI) Servizi.

The world now will have to wait until next month to learn the identity of (ALI)'s savior, as the Italian government decided to hold off until at least mid-January to determine with whom to negotiate the sale of its 49.9% stake. One day after the (ALI) board opted to defer its own vote, while it waited for an analysis from Citigroup, the office of Prime Minister, Romano Prodi announced that the government "will evaluate the claims made by the board . . . [and] expects to conclude its assessment within the first half of January." (AFA)/(KLM) and (ADH) parent, AP Holding remain in contention. The Prime Minister's office added that "the government will be thorough and will see whether the proposal of the [selected bidder] . . . conforms to the general interest." While a recent meeting between Prodi and French President, Nicolas Sarkozy will not feature discussion of (ALI), according to comments from Prodi, cited in widespread press reports, (ADH) head, Carlo Toto said he does expect an audience with the government before a decision is made. "We also believe that . . . for the proper evaluation of our proposal, it would be useful to explain our position to the government," he said, according to "Bloomberg News." Some unconfirmed press reports from Italy, said the government may go with the rumored preference of the (ALI) board - - (AFA)/(KLM) - -, but will ask the Franco-Dutch group to offer to (ADH) assets it may not require, such as extra slots.

The Board of Directors of (ALI) has decided to choose (AFA)/(KLM) as its preferred bidder and considered its offer the best guarantee for (ALI)'s future. The decision came after a board meeting, which lasted almost seven hours and saw (AFA)/(KLM) win out over a rival offer presented by the AP Holding, the parent company of Italy's biggest private carrier (ADH). The board's decision is, in fact, only a suggestion to the government, which has the final word on the sale of the Treasury Ministry's controlling 49.9% stake in (ALI). The Italian government said earlier that it would make a decision on the board's recommendation by the middle of January. (AFA)/(KLM) said it is a top priority to renew (ALI)'s fleet, and that the combination of the three European brands "will be able to offer clients an unparalleled international network." (AFA/(KLM)'s plan calls for returning (ALI) to profitability by 2010, and includes total investments of 6.5 billion euros through 2015.

However, many analysts believed the AP Holding will now launch a political offensive to persuade the government to go against the (ALI) board's recommendation. The AP Holding confirmed it will be offering 1 euro cent per (ALI) share, compared to a reported 35 cents by (AFA)/(KLM), and that it expected (ALI) to break even by 2009 and to return to profit by 2010. The AP Holding would invest a total of 5 billion euros in (ALI), 1 billion to boost the company's capital and 4 to renew its fleet.

The Italian government owns a 49.9% share and has decided to sell most stake at the end of last year. An auction failed this summer after bidders complained they were denied access to (ALI) books and not guaranteed full control of (ALI).

(AFA)/(KLM) will launch daily London Heathrow - Los Angeles service on March 30 aboard a 777. The same day, (AFA)/(KLM) will begin codesharing with Delta Air Lines (DAL) on 12 (DAL) flights between the USA and the UK/Ireland

January 2008: 2007 statistics: 205.82 billion (RPK)s passenger traffic +4.2%; +3.9% capacity (ASK)s; +.3 load factor for 81.4% LF. SEE ATTACHED COMPARISON CHART TO SELECTED OPERATORS - "KLM-2007-STATS."

The Association of European Airlines elected (KLM) President & (CEO), Peter Hartman as Chairman for 2008. Hartman takes over from Iberia (IBE) Chairman & (CEO), Fernando Conte.

Exclusive negotiations between Air France (AFA)/(KLM) and Alitalia (ALI) on a possible merger were scheduled following the official approval of Italian Minister of Finance Tommaso Padoa-Schoppia, according to widespread press reports. "We are very satisfied with this decision, which represents a key stage in the process, and we are committed to rapidly reaching a solid agreement that paves the way to the profitable growth of Alitalia (ALI)," (AFA)/(KLM) Chairman & (CEO), Jean-Cyril Spinetta said. The (ALI) board unanimously backed (AFA)/(KLM)'s nonbinding bid on December 21. The initial negotiating phase will last eight weeks.

The Franco-Dutch group's interest in consolidation does not end with (ALI). On Christmas Eve, it announced an agreement to acquire VLM Airlines. Financial details of the transaction were not disclosed. VLM, which won Air Transport World (ATW)'s "Regional Airline of the Year" award two years ago, operates a fleet of 18 F 50s and one B Ae 146 and is the largest carrier at London City Airport (LCY). "The strengths of the (AFA)/(KLM) Group will provide the necessary support to take the development of VLM Airlines to the next level," VLM, Managing Director, Johan Vanneste said. The carrier, which is expected to report its 10th consecutive profitable year in 2007 on a +10% growth in passenger numbers and turnover, will cooperate with Dublin-based CityJet, a 100% subsidiary of (AFA) that also operates out of (LCY). "Both networks are highly complementary and the new combined network will link London City (LCY) with major European business and financial centers," CityJet, (CEO) Geoffrey O'Byrne-White commented.

(ALI) Chairman & (CEO), Maurizio Prato said early negotiations with (AFA)/(KLM) "are going rather well," according to press reports, with the early buzz surrounding the recently launched talks centering on the amount of (ALI) that will remain with the Italian state, once (AFA)/(KLM) takes over, and a share swap is completed. Originally pegged at 3%, the stake may rise to 5%, if Prato and the (UGL) union have their way, "Reuters' reported. (UGL) Secretary General, Renata Polverini said a 5% stake would be warranted if (ALI) repurchases the 51% of (ALI) Servizi AZS), it sold to Fintecna two years ago, according to "Thomson Financial." The government's 49.9% share of (ALI) would be worth 3% of a combined (AFA)/(KLM)/(ALI), with (AZS) worth a further 2%.

Airlines throughout the world are contending with antitrust charges made at the end of 2007 by the European Commission (EC), which has accused at least 11 and as many as 25 carriers of "cartel" activity relating to airfreight transport. In addition to British Airways (BAB), Japan Airlines (JAL), (AFA)/(KLM), (SAS) Group, and Cargolux (CLX) (all of which confirmed receipt of statements of objections from the (EC) before Christmas),(ANA), Air New Zealand (ANZ), Air Canada (ACN), Cathay Pacific Airways (CAT), (LAN) and Singapore Airlines (SIA) have admitted to being charged. Carriers charged late last year, have two months from the receipt of statements of objections to respond in writing to the (EC) and also have the option of requesting a formal hearing. An airline found guilty or admitting to guilt can be fined up to 10% of its annual revenue.

February 2008: "Ever-higher" fuel costs, striking employees, steeper taxes and what Air France (AFA)/(KLM) described as a "negative impact from the revaluation of derivative instruments" weighed heavily on the company's profit in the fiscal third quarter ended December 31, although its operating result remained robust.

The airline group reported net earnings of +€139 million/+$202.6 million for the three-month period, down -39.3% from +€229 million earned in the year-ago quarter. Revenue rose +3.9% to €5.98 billion and operating profit climbed +23.4% to +€311 million. It took an €85 million non-operating charge, that impacted the net result, which suffered further against the year-ago figure, because of a €73 million swing in its tax bill owing to a credit received in 2006.

Passenger revenue climbed +2.7% to €4.69 billion, as traffic rose +1.9% (RPK) year-over-year against a +2.7% lift in capacity (ASK). Load factor fell -0.6 point to 79.2% LF. (AFA)/(KLM) carried 17.8 million passengers during the period, up +0.2%. Yield climbed +2.5% to 8.98 euro cents and (RASK) was up +1.7% to 7.11 euro cents. Unit cost rose just +0.1% to 6.65 euro cents.

Operating income for the passenger segment jumped +47.6% to +€248 million, while the cargo result rose +11.3% to +€69 million, and the maintenance segment suffered a -37% drop to +€17 million.

(AFA)/(KLM)'s nine-month net profit soared +52.3% to €1.29 billion, as operating profit lifted +17.9% to €1.45 billion.

Air France (AFA)/(KLM) will have to wait until at least February 20 to conclude negotiations with Alitalia (ALI), following an Italian court's decision to hold a hearing that day on Air One (ADH)'s challenge to the exclusive discussions. (ALI) Chairman, Maurizio Prato said (AFA)/(KLM) had intended to begin meeting with (ALI) unions starting February 15, according to "Reuters." Doubts about the sale's progress already had risen with the recent resignation of the Italian Prime Minister and (AFA)/(KLM) supporter, Romano Prodi. New elections are scheduled for April. Prodi told media that the sale remains "necessary and indispensable" and that government officials will continue to try to push it through.

(ALI) released details of its revised network plan, set to take effect on March 31. Calling the management of two hubs an "impossibility" and committing itself to a "return to its traditional mission as a carrier serving Italy," it said most of its flights to Milan Malpensa constitute feeder traffic, often for other carriers, and represent "a burdensome and unsustainable duplication" of traffic to/from Milan Linate. It will eliminate mainline service to Rimini, Olbia and Perugia in Italy, seven European destinations and four long-haul cities (Dakar, Shanghai, Mumbai, and Delhi). Weekly flights from Rome Fiumicino (FCO) will increase +13.9% year-over-year to 1,601 and the network will feature 24 domestic, 45 European and 14 intercontinental destinations.

Later, Air France (AFA)/(KLM)'s negotiations with Alitalia (ALI) received a slight boost, when Renato Brunetta, an official with the Forza Italia (FI) party that has been an opponent of the sale, told reporters that while (FI) believes the government succeeding that of outgoing Prime Minister, Romano Prodi should conclude the deal, if one is struck between (AFA)/(KLM) and (ALI) in the meantime, (FI) "would respect it." (FI) reportedly is leading opinion polls ahead of the April elections.

The Dutch government is facing parallel lawsuits challenging its plan to levy a new environmental ticket tax on all passengers departing from domestic airports. The tax, which comes into effect July 1, amounts to €11.25/$16.59 per passenger for European Union (EU) destinations (with some exceptions) inside 2,500 km and €45 for other flights. Amsterdam's Schiphol Group, together with Dutch travel bureau association (ANVR), launched legal action to prevent the tax, while The Board of Airline Representatives in the Netherlands (BARIN) filed a separate, though similar injunction request. The hearing is scheduled for March 5 at the Court of Justice in The Hague.

All three parties argue the tax violates Article 15 of the Chicago Convention, which states that "No fees, dues or other charges shall be imposed by any contracting state in respect, solely of the right of transit over, or entry into or exit from the territory of any airplane of a contracting state or persons or property thereon." In addition, they claim the Dutch government is wrong to claim the tax is "environmental" because it serves no particular environmental purpose. Moreover, (BARIN) notes, "within a short period of time, an (EU)-wide environmental measure for air traffic is expected: The Emission Trade System in 2012. (KLM) and Schiphol Airport have suggested to introduce a similar system in the Netherlands on a voluntary basis . . . but this has been rejected by the government for unclear reasons." The trio claims the economic disadvantages of the ticket tax likely will be enormous. The Netherlands is a small country and the tax will drive passengers to fly from nearby airports in Belgium and Germany. Independent research acknowledged by the government, forecasts a drop in passengers in 2011 of -8% to -10% at Schiphol and -11% to -13% at other Dutch airports.

(KLM) took delivery of its first 777-300ER as part of a November order for two 777-300ERs and three 737-700s. It will deploy the airplane in a two-class configuration on routes to Dubai, Sao Paulo Guarulhos, New York (JFK), and Manila. (KLM) has aligned the configuration and specification of its 777-300ER with Air France (AFA), which has operated the type since May 2004. (KLM) currently operates 15 777-200ERs.

737-8K2 (30372, PH-BXY), 777-306ER (35671, PH-BVA "Nationaal Park De Hoge Veluwe"), named after the largest national park in The Netherlands, and A330-203 (900, PH-AOL "Picadilly Circus - London", (ILF) leased), deliveries.

March 2008: Air France (AFA)/(KLM) flew 14.95 billion (RPK)s passenger traffic in February, up +3.7% from the year-ago month, against a +8.4% increase in capacity to 19.81 billion (ASK)s. Load factor dropped -3.4 points to 75.5% LF.

Silvio Berlusconi, head of the Forza Italia (FI) party and the favorite to be elected Italy's new prime minister in April, said that he opposed Air France (AFA)/(KLM)'s acquisition of Alitalia (ALI). The comments, made on domestic television, conflict with those by Lega Nord (LN) officials last month. (LN) is allied to the center-right coalition headed by (FI). "On Alitalia (ALI), I am critical, very critical. I think Italy should not be deprived of its flag carrier," Berlusconi reportedly told Sky TV 24. He suggested that Italian companies form a consortium to buy and manage the airline. He also defended Milan Malpensa's status as a hub airport, saying that (ALI)/(AFA)/(KLM)'s plan to reduce service in the north is a "grave problem."

The Air France (AFA)/(KLM) board met and authorized the company to submit an offer for Alitalia (ALI) subject to certain pre-conditions, "including notably the commitment of the trade unions."

Later, The Alitalia (ALI) board unanimously agreed to accept an offer by Air France (AFA)/(KLM) to acquire control of the ailing Italian carrier - - subject, however, to a number of what the parties call "effectiveness conditions" that must be fulfilled by March 31. "The board has carried out its evaluation of the binding offer also in light of the worsened airline sector and macro-economic scenario, as well as considering the critical situation of the company and available alternatives," (ALI) said in a statement, noting that the proposal offers "the appropriate solution" to preserve its assets and to promote both rapid and stable restructuring and long-term development. (AFA)/(KLM) is proposing to acquire 100% of Alitalia (ALI)'s capital via an exchange offer with a parity of one (AFA)/(KLM) share for 160 Alitalia (ALI) shares, valuing the latter's equity at €139 million, or €0.10 per share. (AFA)/(KLM) also will acquire all convertible bonds issued by Alitalia (ALI) at €0.3145 per bond, which was the recent market price, or a total of €608 million. In addition, (AFA)/(KLM) will underwrite a €1 billion capital increase following the closing of the offer. "Its membership of the Air France (AFA)/(KLM) Group together with the implementation of the [new three-year industrial] plan, should enable Alitalia (ALI) to return to operating profit as early as 2009," (AFA)/(KLM) said. But plenty of conditions will have to be fulfilled first, including agreements with unions at both (ALI) Fly and (ALI) Servizi. The Industrial Plan 2008 to 2010, which was approved by the board, foresees a reduction of (ALI) Fly's workforce by -1,600 employees by 2010. Reportedly, (AFA)/(KLM) Chairman, Jean-Cyril Spinetta and (ALI) Chairman, Maurizio Prato are scheduled to meet with (ALI)'s nine trade unions.

(AFA)/(KLM) also wants a "formal written" undertaking from the appropriate Italian governmental authority to maintain (ALI)'s current portfolio of air traffic rights and to address future traffic requests in a transparent and nondiscriminatory manner. Further, it wants a signed agreement between (ALI) and Aeroporti di Roma, operator of both Roman airports, firming service standards, as well as a similar accord among (ALI), Fintecna, and (ALI) Servizi. Lastly, (AFA)/(KLM) wants an "applicable solution to definitely remove the risk connected to the Milan airports operator (SEA) claim." (SEA) is seeking €1.25 billion in damages from (ALI) for cutting flights at Milan Malpensa (MXP).

(AFA)/(KLM)'s industrial plan for the restructuring and relaunch of (ALI) calls for a single hub at Rome Fiumicino and a drastic cutback of medium- and long-haul flights from (MXP). It also plans to develop (ALI) low-cost subsidiary, Volare Airlines (VLR) similarly to Transavia (TAV). Both (AFA)/(KLM) and (ALI) said they expect the European Union (EU) clearance by July.

Air France (AFA)/(KLM) said it has secured the approval of the Italian Ministry of Economy and Finance for its bid for Alitalia (ALI), but the road ahead may be difficult as a majority of trade unions, and the future government, still must sign off on the deal, (AFA)/(KLM) Chief, Jean-Cyril Spinetta said. "The deal is at risk. But I still have hope," he said, according to widespread press reports. "Everyone knows that the margin for maneuver to improve the plan is nonexistent or extremely limited." (AFA)/(KLM) set March 31 as a deadline for certain conditions to met, including dismissal of a lawsuit by Milan airports operator (SEA). Consent of the majority of (ALI)'s trade unions is critical as well. "If there is not this support, it would be very difficult for Air France (AFA)/(KLM) to commit itself to a very difficult economic operation," Spinetta said. He said (AFA)/(KLM ) is willing to delay the phasing out of (ALI)'s cargo operations for two years in order to appease labor groups.

Air France (AFA)/(KLM) confirmed that its restructuring of Alitalia (ALI) will include approximately -1,600 job cuts, fleet downsizing, and the transfer of some 2,800 (ALI) Servizi employees to (ALI) Fly with the remaining (ALI) Servizi staff retained for up to two consecutive periods of four years. State severance schemes will be implemented for the employees who lose their jobs. "The aim of the Air France (AFA)/(KLM) Group is not to take over Alitalia (ALI), but to see whether it is possible to build a major global airline group together with the entire Alitalia (ALI) workforce," (AFA)/(KLM) Chairman & CEO, Jean-Cyril Spinetta said.

(ALI) Chairman, Maurizio Prato told unions following a meeting with (ALI) and (AFA)/(KLM) executives, that the (AFA)/(KLM) offer was solid and the unions "should take it or leave it," according to "Agence France Presse.: Meanwhile, Silvio Berlusconi, the head of Forza Italia and the favorite to become Italy's new Prime Minister next month, called for a new offer for the airline from domestic interests and said that his sons might participate. "I say that if in Italy there are businessmen with only a bit of pride, they must step forward with an offer and a business plan to avoid this dishonorable end of our national company," he was quoted as saying. "First there was a shady auction, then the negotiations with (AFA)/(KLM) only, which to me seems inadmissible." (AFA)/(KLM) has said the approval of the next government is a condition of its successful acquisition of (ALI).

Later again, Silvio Berlusconi, who is favored to take over as Italian Prime Minister following next month's elections, said that he will reject Air France (AFA)/(KLM)'s acquisition of Alitalia (ALI), if and when he assumes office. A day after calling on Italian bidders to step forward and make an offer, Berlusconi told the "ANSA" news agency, "The response to Air France (AFA)/(KLM) that the next Prime Minister will give, will be a clear 'no,' not because it's against France, but because it's against the conditions as they were presented." He said he was continuing to attempt to muster an Italian bid for the carrier and would be able to present one "in a few days," according to press reports. "I am absolutely confident we can do it with the support of important banks. I am now involved, so it will get done," he said. Outgoing Prime Minister, Romano Prodi reportedly told Berlusconi recently that new offers will be considered, but they should be serious and be presented soon, the "AGI" news agency reported. (AFA/(KLM) said a decision must be made soon. Speaking in Biarritz, (AFA)/(KLM) Commercial Director, Christian Boireau told "Thomson Financial," "What we are asking of Alitalia (ALI) is that it make the necessary changes so as to be able to guarantee this future . . . We know what we can do and this plan must be either accepted or refused, but now is the time, not in two months or in a month."

Later, Air France (AFA)/(KLM) stated it will retain 4,191 out of approximately 7,400 (ALI) AZ Servizi workers under a new plan submitted to unions, rather than the 3,300 it originally anticipated, according to a document accessed by "Reuters." It eventually plans to cut an additional -500 positions, the news agency reported, and still plans to cut approximately -1,600 employees from Alitalia (ALI)'s flying operation and close the cargo subsidiary in 2010.

Meanwhile, (AFA)/(KLM) dismissed a "Le Figaro" report that Chairman & CEO, Jean-Cyril Spinetta will resign as CEO in October, when he reaches age 65. He would remain Chairman, the newspaper said, adding without citing sources, that President & COO, Pierre-Henri Gourgeon would succeed him. "The departure of Jean-Cyril Spinetta is a rumor and the company does not wish to make any comment about it," an (AFA)/(KLM) spokesperson said. "The board of the company authorized the Chairman to preserve his functions until he is 70."

The European Commission conducted so-called unannounced inspections at the premises of a number of international passenger airlines operating long-haul flights to Japan, suspecting them of price-fixing. "The Commission (EC) has reason to believe that the companies concerned may have violated (EC) rules on restrictive business practices," it said in a statement that followed the release of a regulatory filing by Lufthansa (DLH) admitting its offices were raided. "The European Commission (EC) is conducting an investigation in the offices of Deutsche Lufthansa AG (DLH) in Frankfurt. According to information from the investigation decision, the Commission (EC) has information that passenger aviation companies, including Lufthansa (DLH) in Europe and in Japan may have taken part in anticompetitive price-fixing and collusive behavior, in traffic between the (EU) and Japan," (DLH) stated, adding that it is cooperating with the (EC) "in full and willingly providing all the requested information." This is not Lufthansa (DLH)'s first encounter with a cartel probe. In 2006, the German carrier was one of many investigated for airfreight price-fixing. It was granted conditional immunity after it was the first airline to admit wrongdoing. (KLM) also confirmed its offices had been searched in relation to "possible anticompetitive behavior regarding passenger services on routes from Europe to Japan" and said it would cooperate with investigators. Alitalia (ALI) was raided too, according to "Reuters," but (ALI) did not confirm. British Airways (BAB) and Virgin Atlantic Airlines (VAA), which were sanctioned for colluding on fuel surcharges on long-haul flights, said they were not raided. Iberia (IBE) noted its flights to Japan were operated on a codeshare basis and said it had no information on the investigation.

Air France (AFA) confirmed that its offices were raided by the European Commission (EC) as part of its investigation into alleged price-fixing practices on passenger flights between Europe and Japan. Lufthansa (DLH) and (KLM) revealed that they had been targeted. "Air France (AFA) confirms that in similar fashion to other airlines, it is being questioned by the European Commission (EC) about links between the (EU) and Japan. Air France (AFA) is providing the Commission (EC) with its full cooperation," it said in a statement.

(KLM) Engineering & Maintenance (E&M) reached agreement with the Japan Civil Aviation Bureau (JCAB) to perform base maintenance on 747-400s. The (JCAB) also granted (KLM) (E&M) a two-year line maintenance extension. The work will take place in Amsterdam.

737-8K2 (30368, PH-BXZ), and 777-306ER (36145, PH-BVB), deliveries.

April 2008: Air France (AFA)-(KLM) flew 17.68 billion (RPK)s passeger traffic in March, up +3.2% from the year-ago month. Capacity rose +4.8% to 21.83 billion (ASK)s, dropping load factor -1.3 points to 81% LF.

Unable to reach an accord with Alitalia (ALI)'s trade unions following a two-day extension to the negotiations, Air France (AFA)-(KLM) ended its effort to acquire the ailing flag carrier, leaving (ALI)'s future once again up in the air. (AFA)/(KLM) said that when it submitted its final offer for (ALI) last month, it "clearly indicated that [it] was contingent on prior agreement with the trade unions" representing a majority of employees. Despite reportedly offering several concessions as talks reached their climax, (AFA)/(KLM) said a new proposal offered by the unions went too far and "would involve retaining a number of activities generating large-scale losses . . . incompatible with the target of a rapid return to profit." Arguing that its plan for Alitalia (ALI) "would have no chance of success unless it had the backing of the trade unions," (AFA)/(KLM) pulled the plug, saying it "has no mandate from its board . . . to follow up this new proposal." Chairman & CEO, Jean-Cyril Spinetta said the "breakdown . . . is none of our doing. This is a project I have profoundly believed in and continue to do so, because it would have ensured Alitalia (ALI) a rapid return to profitable growth."

A firm backer of (AFA)/(KLM)'s efforts, Alitalia (ALI) Chairman, Maurizio Prato subsequently resigned, according to a statement cited by press reports from Rome. "A board meeting has been called, which will decide the appropriate steps," (ALI) said, adding that the contract it signed with (AFA)/(KLM) following a period of exclusive negotiation "is no longer valid." The events likely will please politicians favored to assume control of the Italian government in the upcoming elections, but Minister of Finance, Tommaso Padoa-Schioppa warned a parliamentary hearing that they may spell doom for the airline. "It would be bitter destiny if the company, dragged down for years because of a perverse relationship with politics, got its mortal blow from exploitation for election purposes or from the lack of a deal with unions," he said. He added that the government could not grant the urgently needed €300 million/$470.9 million bridge loan requested by the airline without the (AFA)/(KLM) takeover, because additional state aid to (ALI) is prohibited by the European Commission (EC).

Later, the Alitalia (ALI) board convened an emergency meeting following Air France (AFA)/(KLM)'s withdrawal from its bid to acquire the ailing Italian flag carrier and named Aristide Police as chairman replacing the resigned Maurizio Prato. The board maintained that the (AFA)/(KLM) deal remains "suitable to ensure Alitalia (ALI) can return to profitable growth," according to "Reuters," and that it would "evaluate the existence of the necessary conditions to continue doing business" at an upcoming meeting. However, time is running out. (ALI)'s cash reserves dropped to €180 million in February and the Milan Stock Exchange has suspended its shares. The outgoing government, which had backed (AFA)/(KLM)'s proposal, issued a statement saying it was committed to ensuring Alitalia (ALI) remained operational and urged the board to take urgent action to ensure it keeps flying. It also said it would try to determine if (AFA)/(KLM)'s decision was final or if there was a chance it would be willing to restart talks with (ALI)'s unions, which indicated they were open to resumption of negotiations.

Air France (AFA)-(KLM) formally withdrew its offer to acquire (ALI), saying, "The conditions precedent that had to be satisfied prior to launching were not fulfilled."

The USA Dept of Transportation (DOT) tentatively approved transatlantic antitrust immunity for six SkyTeam (STM) members - - Air France (AFA), Delta Air Lines (DAL), (KLM), Northwest Airlines (NWA), Alitalia (ALI), and (CSA) Czech Airlines - - nearly four years after Delta (DAL) and Northwest (NWA) first petitioned the (DOT) to allow the alliance. After an initial denial, they reapplied last June with a substantially revised agreement. Currently, (DAL) has antitrust immunity with (AFA), Alitalia (ALI), and (CSA), while (NWA) enjoys immunity with (KLM). The (DOT) said it "concluded that the proposed alliance is in the public interest, because it features a proposed new and highly integrated joint venture, that will likely produce efficiencies and provide consumers with additional price and service options, such as lower fares and more nonstop and connecting flights." In response, (DAL) Executive VP Network Planning & Revenue Management, Glen Hauenstein said he was "pleased" that the (DOT) "recognizes once again that antitrust immunity offers significant advantages to customers" and that the grant will "significantly strengthen the SkyTeam (STM) alliance." (AFA) and (KLM) said the preliminary decision "seems to be a logical response to both the Air France (AFA)-(KLM) merger and the new European Union (EU)-USA "Open Skies" agreement," and that they would "welcome a quick and final decision from the USA Authorities." The immunity will enable (AFA), (KLM), (DAL), and (NWA) to establish a joint venture agreement among the four and ultimately integrate their transatlantic operations. (AFA) and (DAL) last year initiated their own partnership modeled after the (NWA)/(KLM) tie-up launched a decade ago. The (DOT) proposed that as a condition of obtaining immunity, the carriers must launch their alliance within 18 months.

Air France (AFA)-(KLM) said it was "pleased" by the Delta Air Lines (DAL)/Northwest Airlines (NWA) merger announcement and that it looked forward to combining with the new carrier "in the form of a joint venture offering a network with extremely attractive multiple hubs." (AFA)-(KLM) said it had offered short-term financial aid to the airlines as part of the transatlantic alliance granted antitrust immunity last week, but said that "considering the strong liquidity position of the combined airlines," it is "totally satisfied with the new framework which strengthens our North Atlantic partnership without the need for financial aid on our part."

Although not part of the SkyTeam (STM) tie-up, Continental Airlines (CAL) "will always be welcome to remain in SkyTeam (STM) and enjoy all of the benefits of the alliance" if it chooses to remain independent, (NWA) CEO, Doug Steenland said. A merger with United Airlines (UAL) likely would send (CAL) to the Star Alliance (SAL).

737-8K2 (37593, PH-BGA), delivery.

May 2008: Air France(AFA)-(KLM) flew 17.44 billion (RPK)s passenger traffic in April, up +2.6% from the year-ago month. Capacity rose +5.4% to 21.79 billion (ASK)s, dropping load factor -2.3 points to 80% LF.

Air France (AFA)/(KLM) Group reported a consolidated net profit of +€748 million/+$1.17 billion for the fiscal year ended March 31, a -16% decline from the +€891 million earned in the prior year, as it booked a €530 million provision to cover possible penalties arising from the ongoing antitrust probe into airline cargo activities. The net profit also benefited by €284 million in disposal gains. Excluding the exceptional items, earnings rose +10.8% to €987 million. Revenue was ahead +5.8% to €24.1 billion and operating costs climbed +4% to €22.71 billion. Operating profit increased +13.3% to +€1.41 billion from +€1.24 billion in 2006 through 2007. While highlighting "the excellent quality of our results, which met all our objectives," Chairman & CEO, Jean-Cyril Spinetta noted that Fiscal Year (FY) 2008 witnessed a deterioration in the economic environment during the second half linked to the crisis in the financial sector and the sharp rise in oil price. He warned that the current year is "set to be challenging" with oil and the stagnating global economy creating significant uncertainty, but he claimed the company will "remain comfortably in profit" owing to its strategic advantages, fuel hedging, cost-cutting efforts and increasing synergies with (KLM), with which it merged in 2004. Based on an oil price of $120 per barrel, he predicted operating income "in the region of €1 billion" this year.

Deputy CEO, Pierre-Henri Gourgeon said the group's passenger business had another "excellent year" with revenue rising +4.3% to €19.16 billion on a +3.9% increase in traffic (RPK)s. Capacity was up +4.6% and load factor slipped -0.6 point to 80.8% LF. (AFA)-(KLM) carried 74.8 million passengers, up +0.7%. Yield increased +1% to 8.78 euro cents and (RASK) inched up +0.3% to 7.09 euro cents. Unit cost declined -0.7% to 6.52 euro cents, despite higher fuel costs.

The fourth quarter closed with a net loss of -€542 million, owing to the cargo probe provision. Excluding this provision, the loss would have been -€49 million against a positive result of +€44 million in the year-ago period. Quarterly revenue rose +5.8% to €5.7 billion.

The USA Dept of Transportation (DOT) announced a grant of transatlantic antitrust immunity to SkyTeam (STM) partners Delta Air Lines (DAL), Northwest Airlines (NWA), Air France (AFA), (CSA) Czech Airlines, Alitalia (ALI), and (KLM), upholding a tentative approval issued last month. The six now will be able to "coordinate their transatlantic fares, services and capacity as if they were a single carrier in these markets, subject to certain conditions," the (DOT) said, adding that the approval is unrelated to (DAL)'s and (NWA)'s merger plans. Those are subject to a separate review. The (DOT) said the alliance "is in the public interest, because it features a proposed new and highly integrated joint venture, that will likely produce efficiencies and provide consumers with additional price and service options," but that the alliance must be implemented within 18 months as a condition of immunity. (NWA) President & CEO, Doug Steenland said, "This enhanced ability to coordinate among the carriers will provide a more positive, seamless experience for our customers with single-ticketing, seamless baggage handling and greater customer ease and convenience. It is also good news in light of skyrocketing fuel costs."

Aviapartner was contracted by (KLM) to provide all ramp handling and traffic operations services in Marseille, Nice, and Toulouse. Flights are operated with F 70s and F 100s.

2 737-8K2s (30361, PH-BGC; 37594, PH-BGB "Whimbiel/Regenwulg"), deliveries.

June 2008: China Southern Airlines (GUN) signed a framework agreement with Air France (AFA)/(KLM) to launch a cargo joint venture (JV), (GUN) President, Liu Shaoyong said. "The new cargo (JV) will be named "AE Cargo" and is expected to go into formal operation next year and operate 10 airplanes, including 747s and 777s, at the initial stage," Liu revealed. "AE" stands for "Asia Europe." He said (GUN) will hold a 75% stake in the new entity, while (AFA)/(KLM) will hold the rest.

Although Chinese carriers have just 24% of the domestic cargo market compared to foreign competitors, Liu is confident that "AE" will be better positioned as "the operating efficiency can be enhanced greatly through (GUN)'s cooperation with (AFA)/(KLM)." He said (GUN) will ask (AFA)/(KLM) to nominate a (CEO) candidate.

Air France (AFA)/(KLM) said it is pleased with the performance of its first direct transatlantic service out of London Heathrow (LHR), which it launched March 30 to take advantage of the (EU)-USA "open skies" agreement. The daily, (LHR) - Los Angeles flight aboard a 777 is performing "very well," Executive VP Marketing, Revenue Management & Network, Bruno Matheu said. Load factor in the first month was above >70% LF, with higher loads in the back and lower in premium, but loads are much more "balanced" now, he said. (AFA) has been generating 75% of the bookings and its code sharing SkyTeam (STM) partners the remainder. Most reservations were generated in the USA initially but now the UK is taking the lead.

In light of the positive results, (AFA) is committed to increasing its foothold at (LHR) with more direct transatlantic flights, Matheu revealed. Slots are an issue, he admitted, while declining to comment on whether (AFA) actively is seeking to acquire slots or how much it is willing to pay for a pair. "The remedies [slot surrender] related to a potential British Airways (BAB) - American [Airlines] (AAL) could be a good opportunity" to obtain more slots, he said.

Air France (AFA)/(KLM), Cathay Pacific Airways (CAT), Martinair (MTH) and the (SAS) Group all reached agreement with the USA Department of Justice (DOJ) to plead guilty in USA court and pay criminal fines "for participating in a multiyear conspiracy to fix prices for air cargo rates," the (DOJ) said. (AFA)/(KLM) will pay a $350 million fine, Cathay (CAT) has agreed to pay $60 million, Martinair (MTH) $42 million, and (SAS) $52 million, bringing the total imposed by the (DOJ ) during its investigation into air cargo antitrust violations to $1.27 billion. The figure marks the highest amount ever imposed by the antitrust division in one investigation. British Airways (BAB), Korean Air (KAL), Japan Airlines (JAL), and Qantas (QAN) already have pled guilty and paid fines. In addition, a former Qantas (QAN) executive will serve eight months in a USA jail as a result of the investigation.

July 2008: (IBS) Software Services will provide (KLM) with its AvientCrew solution featuring crew data management, real-time alerting and decision support capabilities.

Southwest Airlines (SWA) and (KLM) became the latest carriers to achieve (CFM) International's "TRUEngine" designation for their respective (CFM56)s. (SWA) operates more than >1,100 (CFM56-3) and (CFM56-7B) engines, while (KLM) has more than >115 (CFM56-3)s and (CFM56-7B)s. To qualify for TRUEngine status, the engine configuration, overhaul practices, spare parts, and repairs used to service it, must be consistent with (CFM) requirements for that model. In addition, all maintenance must comply with (CFM)-issued manuals and other maintenance recommendations.

August 2008: 1st 6 months = 102.53 billion (RPK)s traffic - - see "KLM-08TOPWLD6MTHSRPK."

(KLM) will add four weekly frequencies to its daily Amsterdam - Hong Kong 747-400 Combi service from March 29.

(KLM) took delivery of its first 737-700. It ordered 13 as part of a €3 billion/$4.4 billion fleet renewal that commenced in 2002. The 737-700s will replace its 737-300s and 737-400s.

September 2008: Lufthansa (DLH) is competing with Air France (AFA)/(KLM) to be a strategic partner with a reorganized Alitalia (ALI), whose board declared bankruptcy last month. Roberto Colaninno, who reportedly leads the consortium of 16 Italians organized by Intesa Sanpaolo and prepared to invest €1 billion/$1.48 billion in the carrier, said, "We are negotiating with both, and they're going at the same speed . . . one of the two will do." (AFA)/(KLM) confirmed its interest in partnering with (ALI) last month.

Lufthansa (DLH) Systems signed seven-year contracts with Air France (AFA) and (KLM) for use of its Sirax AirFinance Platform.

Panasonic Avionics reached an agreement with Air France (AFA) to provide its "eX2" In-Flight Entertainment (IFE) system on 10 new 777-300ERs, the first of which is slated to enter service in March 2010. (KLM) already uses the "eX2" system on its 777s. Panasonic says it has delivered or taken orders for more than >900 (IFE) systems around the world.

October 2008: (KLM) took official receipt of a new cost-saving, airplane painting system using environmentally sustainable, chromate-free paint. The system, developed by (KLM) Engineering & Maintenance and German manufacturer Mankiewicz, claims to use -15% less paint and allows the degreasing of the airplane, before repainting to be performed with only soap and water. Previously, this required 800 litres of aggressive, flammable solvent. Paint retains gloss and color longer, dries faster and application process takes two fewer days.

(AFA)/(KLM)'s acquisition of VLM Airlines was cleared by the UK Office of Fair Trading (OFT) along with approval of an "up-front entrant" remedy it said "restores airline competition to pre-merger levels" on the London City (LCY) - Amsterdam (AMS) route, which the (OFT) said is worth more than >£50 million per year. The remedy goes beyond the traditional slot divestment and requires a new entrant to use the divested slots.

Eastern Airways was approved as the new entrant and will commence up to eight-times-daily, (LCY) - (AMS) in January. (AFA)/(KLM) said the (OFT)'s approval opens the door for "close" cooperation between VLM and (AFA) subsidiary CityJet, which also operates from (LCY).

November 2008: Air France (AFA)/(KLM) remains interested in acquiring 20% to 25% in the new Alitalia (ALI), Chairman & (CEO), Jean-Cyril Spinetta confirmed. "We would be willing to invest about €200 million/$253.8 million [in Alitalia (ALI)] through a capital increase," he said. The Compagnia Aerea Italia (CAI) investor group, which was cleared by the Italian government to take over (ALI) for €1.05 billion, has not announced its choice of international partner. The new airline, which will incorporate Air One (ADH), reportedly may be ready to commence operations as early as December 1.

Alitalia (ALI) said it is reducing domestic and short-haul international flying, citing ongoing labor unrest as well as administrative issues related to the transfer to (CAI). Employees must be placed on unemployment before being rehired by (CAI). (ALI) said its intercontinental flight schedule will be "nearly unchanged." It did not specify how many flights will be cancelled. The (ALI) unions that have not accepted either new work conditions offered by (CAI) or redundancy payments, agreed to postpone a strike.

(KLM) appointed Air France (AFA)/(KLM) General Manager Singapore, Vincent Knoops as Senior VP Corporate Communications, effective December 1.

December 2008: (KLM) will launch five-times-weekly, Amsterdam - Calgary service on May 3 aboard an A330-200.

Meanwhile, Spinetta reportedly said he had "fruitful and constructive" discussions with (Compagnia Aerea Italia), the investor group set to take over Alitalia (ALI). The Italian press is speculating that (AFA)/(KLM) leads (DLH) in the race to partner with (CAI) and take a stake in the relaunched airline. However, Italian Prime Minister, Silver Berlusconi said that "what's needed isn't a partner but a commercial agreement," "Reuters" reported. He said (DLH) or (AFA)/(KLM) "could put their interests first and block" those of (ALI).

Air France (AFA)/(KLM) subsidiary CityJet will take over the London City (LCY) -Amsterdam route from VLM Airlines and KLM Cityhopper (AUK) on January 5. It will operate a two-class, 95-seat RJ-85 eight-times-daily on weekdays, once on Saturdays, and four times on Sundays. VLM will take over CityJet's current twice-weekday, (LCY) - Eindhoven service on January 12 and base an additional F 50 at Rotterdam from January 5 to operate charter flights. It will continue to operate its eight-times-weekday, (LCY) - Rotterdam service. The reshuffle follows (AFA)'s acquisition of VLM and incorporates the conditions set by the UK Office of Fair Trading to clear the merger. A combined CityJet/VLM website will be unveiled by year end and absorption of VLM's loyalty program will occur in the coming months.

(KLM) finally will become the sole owner of Martinair (MTH) after the European Commission (EC) approved (KLM)'s proposal to acquire the 50% stake owned by the A P Moller-Maersk Group. The (EC) opened an in-depth investigation in September, citing concerns of the transaction's potential impact on passenger transport, in particular between Amsterdam and Curacao and Aruba. The Competition Commissioner, Neelie Kroes said she was "now satisfied that consumers will continue to have a competitive choice of airline services." Effects of the transaction would be limited not only because (KLM) already jointly controls (MTH) "but also because (MTH)'s competitive strength has been constantly decreasing and, to regain its strength, (MTH) depends on (KLM)'s agreement to a renewal of its long-haul passenger fleet." The (EC) also acknowledged that TUI Travel (TUG) subsidiary ArkeFly (HOL) operates the two routes, and thus "any price increases on the part of the merged entity would be likely to be unprofitable."

(KLM) took an initial stake in (MTH) in 1968, but earlier attempts to gain full control of (MTH) failed to gain regulatory approval. (KLM) will buy A P Moller-Maersk's 50% stake by December 31. "With the (EC) approval, economies of scale and synergies become available. Plans for the future of (MTH) within the Group will be developed in the coming period," (KLM) President & CEO, Peter Hartman noted.

(MTH) President & (CEO), Paul Gregorowitsch said the approval was "encouraging news after a long period of uncertainty . . . The (MTH) restructuring activities can be actively continued given this perspective." (MTH) reported a -€68.9 million/-$94.5 million loss in 2007, widened from a -€7 million deficit in 2006.

January 2009: (AFA)/(KLM appears to be on the verge of being named a minority partner in the reorganized Alitalia (ALI), beating out Lufthansa (DLH) for the right to purchase a 20% to 25% stake, according to widespread press reports from Italy. Investor group Compagnia Aerea Italia (CAI) met with Italian Prime Minister, Silvio Berlusconi yesterday and "explained . . . their preference for (AFA)/(KLM) and were told there were no objections from the government," a (CAI) source told "Reuters" in Rome. Berlusconi told reporters that "(DLH) has never been present, neither physically nor with an offer."

Later, as was widely expected, (AFA)/(KLM) will become the relaunched (ALI)'s international partner and will take a 25% stake in the restructured carrier through a capital increase of approximately €323 million/$435.1 million. The decision ends months of speculation and uncertainty and came on the last day of the flag carrier's operation as the "old" (ALI). The (AFA)/(KLM) board approved the investment.
"In view of the many challenges facing our sector, strengthened cooperation is more than ever a necessity between carriers and we have now made a further step towards this," (AFA)/(KLM) Chairman, Jean-Cyril Spinetta and CEO, Pierre-Henri Gourgeon said in a statement. The Franco-Dutch group will hold three of 19 seats on (ALI)'s board, including two of the nine comprising the executive committee. The agreement includes a four-year lock-up period but allows (AFA)/(KLM) to increase its holding and make an offer for a controlling stake in 2013. The lock-up will cease to apply only in the case of a stock market quotation starting in the third year.

(AFA)/(KLM) presented the "best solution" compared to alternatives offered by Lufthansa (DLH) and British Airways (BAB), (ALI) CEO, Rocco Sabelli said, noting that (DLH) "showed interest in the Italian market but never in a concrete project for a new (ALI)," while (BAB) never wanted to make a "real investment." (AFA)/(KLM) was regarded by most as the natural choice, owing to both its membership in SkyTeam (STM) and its antitrust immunity with (ALI) on transatlantic routes. The carriers have partnered on joint venture on routes between France and Italy since 2002. In 2007, (AFA)/(KLM) won a bid for the Italian government's 49.5% stake in (ALI) but was rebuffed by incoming Prime Minister, Silvio Berlusconi.

(AFA)/(KLM) said the partnership will be based on a multi-hub strategy in which Paris Charles de Gaulle, Amsterdam Schiphol, Rome Fiumicino (FCO) and Milan Malpensa will feature "on an equal basis." Synergies derived mainly from network optimization and revenue management will be achieved over the next three years and should amount to some €720 million for (ALI) and around €90 million for (AFA)/(KLM) by either the second or third year.

January 12 was the old (ALI)'s last day of existence. At 10 pm, all assets were transferred to (CAI). The "new" (ALI) will carry the same name and logo and is essentially a merger of the slimmed-down (ALI) with smaller rival Air One (ADH), which was a (DLH) partner. The new airline will operate 148 airplanes to 70 destinations, including 13 international airports. The first "new" flight was scheduled to depart at 6 am from London Heathrow to (FCO).

February 2009: Air France (AFA)/(KLM) flew 16.11 billion (RPK)s traffic in January, a -1.9% fall from the year-ago month. Capacity was down -1.2% to 21.03 billion (ASK)s, dropping load factor -0.5 point to 76.6% LF.

Stating that results for the fiscal third quarter ended December 31 reflect "the increasing severity of the economic downturn," (AFA)/( KLM) reported a -€505 million/-$649.4 million net loss compared to a +€139 million profit in the year-ago period. The substantial deficit was created in part by major non-operating losses, including a €288 million write down on the fair value of its fuel hedges and a €103 million loss on currency fluctuations.

Third-quarter revenue slipped -0.1% year-over-year to €5.97 billion on a +0.8% increase in passenger revenue and a -10.7% plunge in cargo revenue to €668 million. Operating costs rose +8.9% to €6.17 billion, driven by a +45.3% surge in fuel costs. Operating loss was -€194 million as previously forecast, but reversed from the +€311 million profit posted one year earlier. "Long-haul traffic proved relatively resilient but saw a decline in premium class revenues which the more robust performance of economy class was insufficient to offset," (AFA)/(KLM) said, adding that medium-haul performance was "poor."

(AFA)/(KLM) said it is taking measures in response to the deteriorating economic environment, including a -2% capacity reduction in the summer schedule that will replace a previously planned +1.7% increase. Capital expenditure will be cut by -€1.2 billion over the next two years and "several" hedging positions will be unwound. It is hedged at 43% in 2009 - 2010 and 20% in each of the following two years. Airline spokespeople were quoted by several news sources as saying that the (AFA) unit will reduce the payroll by between -1,000 and -2,000 positions through natural attrition and a hiring freeze. No layoffs are planned.

Third-quarter passenger traffic (including VLM Airlines) rose +3.4% to 51.26 billion (RPK)s against a +2.9% lift in capacity to 64.46 billion (ASK)s, raising load factor +0.3 point to 79.5% LF. Yield fell -1.8% to 8.82 euro cents, while (RASK) was down -1.4% to 7.01 euro cents. Unit cost climbed +7.1% to 7.12 euro cents but was down -1.2% on a constant currency and fuel price basis.

For the nine months, (AFA)/(KLM) was -€309 million in the red, a swing from the year-ago period's +€1.29 billion profit. Operating profit plunged -69.3% to +€445 million from +€1.45 billion. "Our target for financial year 2008 to 2009 is still of a positive operating result, but its level will depend on economic developments between now and the end of the year," (AFA)/(KLM) said. "In the meantime, we will continue to assess all our costs in order to achieve additional savings wherever possible."

WestJet (WJI), Air France (AFA) and (KLM) announced their intention to code share by late 2009 or early 2010. A Memo of Understanding (MOU) signed by the three airlines also covers the possibility of interline e-ticketing, through check-in and loyalty program cooperation. (WJI) said the code share would include flights to/from Calgary, Montreal, Toronto and Vancouver. (KLM) will serve all four when its Amsterdam - Calgary route opens in May, while (AFA) flies to Montreal and Toronto. (WJI) Executive VP Commercial Distribution, Hugh Dunleavy said the (MOU) "marks the successful execution of the next step in our strategic plan." Last year (WJI) announced its intention to code share with Southwest Airlines (SWA).

Air France Industries (AFI), (KLM) Engineering & Maintenance (E&M) and Aviation Repair Technologies (ART) Services formed an engine dis-assembly joint venture, Turbine Support International (TSI). (TSI) will disassemble, inspect and repair (CF6-50), (CF6-80) and (CFM-56) parts to support engine repair activities on (AFA)'s and other third-party airlines and lessors. (AFI) and (KLM) (E&M) will assume a majority stake in (TSI), which will be based at (ART)'s Arkansas State, USA facility.

The Schiphol Group, which operates Amsterdam Airport Schiphol announced plans to cut -10% to -25% of its workforce, currently numbering 2,200, by year end through a combination of natural attrition, outsourcing and layoffs. It cited a "strong decline in traffic and increasing international competition" as the reason and said it agreed to work with trade unions on a short-term redundancy program.

The Australian Competition and Consumer Commission (ACCC) has expanded its investigation into cargo price-fixing and announced commencement of legal proceedings against Air France (AFA), (KLM), Martinair (MTH) and Cargolux Airlines International (CLX) for colluding on fuel surcharges between 2003 and 2006. The carriers "made a number of admissions and consented to the remedies sought including penalties, injunctions and costs," the (ACCC) said. (AFA) and (KLM) have offered to pay a combined fine of A$6 million/$4 million, while (CLX) and (MTH) have offered A$5 million each. The Federal Court will determine the final penalties and a hearing is scheduled for February 16.

"(CLX) has cooperated intensively with the (ACCC) and the other authorities throughout the investigation and the legal proceedings and will continue to do so," Chairman, Marc Hoffmann said. The other airlines did not release statements. Consent proceedings against the quartet follow earlier deals with Qantas (QAN) and British Airways (BAB), which were assessed penalties of A$20 million and A$5 million respectively. The (ACCC) also commenced contested proceedings against Singapore Airlines Cargo (SQC) in December and "continues to investigate other airlines with further actions expected over the next few months," it said in a statement.

Last summer, (AFA)/(KLM) agreed to pay a $350 million fine resulting from a similar investigation by the USA Department of Justice. (MTH) also pleaded guilty to collusion and was hit with a $42 million penalty.

Air France (AFA)/(KLM), British Airways (BAB), Cathay Pacific Airways (CAT), Virgin Atlantic Airways (VAA) and UK airports operator (BAA) announced formation of the Aviation Global Deal (AGD) Group, which expressed its support for inclusion of carbon dioxide emissions in a "new global climate deal" scheduled to be discussed at December's United Nations climate summit in Copenhagen.

Meeting in Hong Kong, the (AGD) argued for a "fair and effective global policy solution" on aviation emissions, which were not included in the 1997 Kyoto Protocol and are not managed under any current global agreement. (ICAO), which the group supports, is working on its own cap-and-trade plan, while the (EU) plans to include aviation in its controversial trading scheme from 2012.

The four airlines and (BAA) said any global emissions policy must "offer genuine environmental benefits . . . be operationally and economically sound . . . maintain competitiveness between airlines and avoid market distortions . . . [and] balance the social and economic benefits of flying with the industry's responsibility to cut global emissions."

(CAT) CEO, Tony Tyler said, "Aviation has a key part to play in reducing global emissions and for too long has been seen as part of the climate problem rather than part of the solution. We hope the work of our group will offer a practical industry-led solution that creates a level playing field and appeals to policy-makers, environmental groups and businesses alike." The (AGD) said it will seek support from other airlines and industry stakeholders.

March 2009: Air France (AFA)/(KLM) flew 14.04 billion (RPK)s traffic in February, down -6% from the year-ago month. Capacity fell -4.5% to 18.92 billion (ASK)s, lowering load factor -1.2 points to 74.3% LF.

(AFA)/(KLM) said that it likely will report a -€200 million/-$271.4 million operating loss for its fiscal year ending March 31 and stated that its focus for the year beginning April 1 is "to limit our operating loss." Just last month, (AFA)/(KLM) said it still expected "a positive operating result" for the current fiscal year. But it said that "lower activity levels" in March reflect "a significant deterioration in unit revenues both in passenger and cargo, notably as a result of the decline in business travel and international trade." It added that the "negative effect of its hedges" has prevented it from benefiting fully from lower fuel prices.

CEO, Pierre-Henri Gourgeon said, "Financial year 2009 to 2010 will begin [April 1] in a context of unprecedented difficulty, with little visibility on how the economy will evolve and on the volatility of factors such as currencies and the oil price." He said (AFA)/(KLM)'s "comfortable cash position" of €3.5 to €4 billion will "allow us to face the challenges ahead with confidence" and noted that passenger capacity will be lowered -3.4% and cargo capacity slashed -13% for the coming Financial Year (FY). "This drop, combined with our other cost-saving measures, should allow us to offset a significant part of the decline in revenues and to limit our operating loss," he said.

A profit warning by (AFA)-(KLM) is proving once again that volatile fuel prices continue to be one of the greatest threats to the airline industry. As it tries to unwind hedging contracts that accounted for roughly 90% of anticipated fuel consumption over the past 12 months, (AFA)/(KLM) says it could lose more than >-$260 million for the fiscal year ending March 31. Despite the loss, "It would be dangerous for airlines to think that fuel hedging is now out of fashion," said aviation consultant, Olivier Fainsilber. "One of the lessons of the fuel price inversion is that the market is hugely volatile. The reversal is a wake-up call for airlines to look at hedging with a sharper lens."

(AFA)/(KLM) announced that it completed the acquisition of a 25% stake in Alitalia (ALI) through a reserved share subscription worth approximately €323 million/$439.1 million. Its partnership with the restructured Italian carrier was announced in January but required approval from competition authorities. At that time, (ALI) said (AFA)/(KLM) would be entitled to nominate three of the 19 members of the board and two members of the executive committee. (AFA)/(KLM) said that the stake grants it "greater access to the Italian market thanks to (ALI) which, following its acquisition of Air One (ADH), has reinforced its position on the domestic market."

Pierre Gourgeon, CEO confirmed that (AFA)/(KLM) will submit an official expression of interest for (CSA) Czech Airlines' privatization by the March 23 deadline, "Reuters" reported. "We understand the Czech government is interested in finding a buyer for a significant part of (CSA). We don't have a lot of information but we are of course very attentive because (CSA) is a SkyTeam (STM) partner," Gourgeon said. (AFA)/(KLM) earlier had indicated its interest in (CSA) as part of its strategy to participate in the consolidation of the European airline industry.

SkyTeam (STM) partners (AFA)/(KLM) and Aeroflot (ARO) were among the four groups filing official yet nonbinding expressions of interest in fellow alliance member (CSA) Czech Airlines, the Czech Finance Ministry announced. The Czech government is selling its 91.5% stake in the airline. Other interested parties are charter carrier Travel Service (TSF)/Unimex Group and Odien, a private investor. (AFA)/( KLM) said the Czechs do not expect any binding offers before June, giving the bidders time to perform due diligence. It said (CSA)'s "network is highly complementary to that of (AFA)/(KLM)" and that it would "enable the group to strengthen its position in Central and Eastern Europe." In a statement, (ARO) confirmed its intention to "maintain (CSA)'s status as a national Czech airline" and said that because it is not a citizen of an (EU)-member nation and cannot own more than >49% of (CSA), it intends to partner with a Czech entity during the tender's second stage. "(CSA) is the largest and most stable airline in Central Europe in economic and market terms. By joining and mutually expanding their route networks, (AAO) and (CSA) will be able to become more profitable," (ARO) CEO, Valery Okulov said. (ARO)'s bid occurred amid the controversy surrounding Okulov's future with the company. Reports surfaced earlier this month that Russian Transport Minister, Igor Levitin wished to replace Okulov and assign him to a ministry position. A board member representing 30% shareholder National Reserve Corporation said removing Okulov would be "madness" and "like putting out a fire with kerosene" in comments reported by "Reuters."

(AFA)/(KLM) said that owing to a "sharp decline in demand," summer schedule (March 29 - October 25) capacity will be down -3.4% year-over-year rather than the -2% announced last month. The reduction will comprise -3.4% cuts on both its long-haul and medium-haul networks. (AFA) will reduce (ASK)s -2.7% (-2.5% long-haul, -3.1% short/medium-haul) without eliminating any routes save Paris Charles de Gaulle - Chennai, which will be suspended due to "heavy losses," and Paris Orly - Valladolid. It will take delivery of four 777-300s during the summer schedule and retire two 747-400s. The oldest A320s will be replaced by A321s. Frequencies to several long-haul destinations, including Montreal and Beirut, will increase while a twice-daily, Basel - Amsterdam flight will begin this summer.

(AFA) will defer delivery of its sixth and seventh A380s in order to "create some savings on the down payment this year and the year after," (AFA)/(KLM) CEO, Pierre-Henri Gourgeon said at the "Reuters" Travel & Leisure summit in New York.

Last month the group announced it would cut capital expenditure by -€1.2 billion/-$1.51 billion to address the economic downturn and would defer delivery of half-a-dozen planes including "777-300ERs, 777Fs and some Airbus (EDS) airplanes."

(AFA) signed on as an A380 launch customer in 2001 and has firm orders for 12, with options on a further two. Its first A380 initially was scheduled to arrive in 2007, but owing to delays in the program, its first three will be delivered at the end of this year or in early 2010. It will be the first European carrier to operate the A380. Its A380s will be powered by the Engine Alliance (GP7200).

(AFA)/(KLM) confirmed it intends to proceed with an order for approximately 100 long-haul airplanes, although the time line has been changed slightly owing to the present economic environment. "(AFA)/(KLM)'s plan to launch a call for tenders for around 100 Airbus (EDS) or Boeing (TBC) medium-capacity long-haul airplanes, initially scheduled for 2008, is being maintained. The order could be placed by the end of the year, or maybe a little later," a spokesperson said. The group has both (EDS) and (TBC) airplanes in its long-haul fleet.

737-7K2 (30367, PH-BGG), delivery.

April 2009: Air France (AFA)/(KLM) said it suffered a "significant deterioration" in March unit revenue. The group flew 16.02 billion (RPK)s traffic during the month, down -9.4% year-over-year, against a -2.9% fall in capacity to 21.21 billion (ASK)s. Load factor dropped -5.5 points to 75.5% LF.

The Czech government selected (AFA)/(KLM) and the Unimex/Travel Service consortium to proceed to the second round of bidding for a 91.5% stake in CSA Czech Airlines. Aeroflot (ARO) and Odien, a private investor firm, were rejected. (AFA)/(KLM) issued a statement confirming its selection. Czech Prime Minister, Mirek Topolanek and Finance Minister, Miroslav Kalousek told reporters that (AFA)/(KLM) and Unimex/TS will be asked to submit their bids by the end of June and that the government would not disclose why they were chosen ahead of (ARO) and Odien.

The (AFA)/(KLM) Group confirmed reports that it could cut up to -3,000 jobs in the current fiscal year that started April 1 and the 2010 to 2011 fiscal year in response to falling demand. The reductions, to be achieved through attrition, non-renewal of short-term contracts and retirements, were set to number -1,000 to -2,000 when the company released its fiscal third-quarter results two months ago. It cut its workforce by more than >-1,000 in the recently completed fiscal year through similar means and still hopes to avoid layoffs. "We should reduce our staff by -2,500 to -3,000 in the next two financial years," a spokesperson told "Agence France Presse." Last month it announced a deeper summer capacity cut and said it expects to report an operating loss of around -€200 million/-$266.1 million for the year ended March 31.

(AFA)/(KLM) and Gol (GOT) signed an agreement linking their respective loyalty programs and establishing a code share arrangement under which (AFA) will add its code to (GOT) flights between Rio de Janeiro, Sao Paulo and 13 Brazilian cities by mid-year. A similar deal is being prepared between (GOT) and (KLM). The European carriers operate 21 weekly flights to Sao Paulo Guarulhos and 14 to Rio de Janeiro Galeao.

Enerjet (ENJ) signed a five-year component support contract with Air France Industries (AFI) and (KLM) Engineering & Maintenance (E&M) covering maintenance and pool access for its 737NGs. Boeing (TBC) and (KLM) (E&M)'s 737NG component services program will offer (ENJ) cost savings of up to -30% and can ship parts from a global pool within 24 hours, the companies claimed.

Amsterdam Airport Schiphol (AMS) must lower tariffs that took effect April 1 by -€3.5 million/-$4.5 million, Dutch competition authority NMa ruled. The Schiphol Group incorrectly passed several non-aviation costs - - including the costs of building a sound barrier around one runway, of training baggage handling employees and of an accountancy control - - to airlines when setting landing and handling fees, NMa said. Under rules introduced in 2006, airport fees must reflect the actual cost of operations, be nondiscriminatory and reasonable. The ruling follows a complaint from (KLM) and the Board of Airline Representatives in the Netherlands, in addition to one from easyJet that has yet to be investigated, NMa said.

May 2009: Despite what it called its responsiveness to unprecedented conditions in the second half of its fiscal year ended March 31, Air France (AFA)/(KLM) Group incurred its first loss since the 2003 merger, a -€814 million/-$1.1 billion deficit that compares to a +€756 million profit in 2007 through 2008. Its operating loss amounted to -€129 million, reversed from a +€1.41 billion operating profit the prior year. "The financial year 2008 - 2009 was one of contrasting halves, with a resilient performance in the first half wiped out by the full force of the economic crisis in the second. Business (C) traffic and cargo were especially affected, leading to a decline in revenues which accelerated in the fourth quarter," CEO, Pierre-Henri Gourgeon said, conceding that the "sharp decline in oil prices had a negative impact on the fuel bill in the second half" in contrast to the first, when its hedging policy was efficient. It took a €715 million financial charge related to the change in the fair value of hedging instruments, mainly fuel.

Full-year revenue including VLM Airlines was €23.97 billion, down -0.6% year-over-year. Operating costs rose +6.1% to €24.1 billion, reflecting a +24.7% increase in the fuel bill to €5.7 billion. Excluding fuel, the rise was contained to 1.4% owing to the Challenge 12 program that delivered €675 million in savings. Unit revenue declined -3.7% to 6.84 euro cents but (CASK) was up +3.9% to 6.89 euro cents. Yield dropped -2.2% to 8.58 euro cents.

Fourth-quarter consolidated net loss came in at -€505 million, narrowed -5.4% from -€534 million in the year-ago period, a result that included a €530 million provision for a fine related to its role in a conspiracy to fix cargo rates. Operating loss was -€574 million, widened from -€37 million. Gourgeon said visibility "remains low, even though we have seen some signs of stabilization in recent weeks" and consequently the group will continue "our strategy of adapting capacity and costs, while at the same time reinforcing our fundamentals, notably via the strategic partnership with Alitalia (ALI) and the North Atlantic joint venture (JV) with Delta [Air Lines] (DAL)." Details of the (JV) will be announced in Paris.

(AFA)/(KLM) will reduce passenger capacity by -4.5% in the summer and cargo capacity by -11%. The initial investment plan of €2.9 billion has been trimmed to €1.4 billion and the cost-savings target was increased to -€600 million.

CEOs of the Air France (AFA)/(KLM) Group and Delta Air Lines (DAL) signed a profit/loss-sharing joint venture (JV) agreement in Paris covering a wide network around 10 hubs representing more than >200 flights and approximately 50,000 seats per day. The airlines said their (JV), which will concentrate on service to/from Amsterdam, Atlanta, Detroit, Minneapolis, New York (JFK) and Paris Charles de Gaulle as well as Cincinnati, Lyon, Memphis and Salt Lake City, represents about 25% of the industry's total transatlantic capacity.
"This strategic partnership puts us in a good position compared with other major alliances, which are extremely active on the world's leading long-haul market, "(AFA)/(KLM) President & CEO, Pierre-Henri Gourgeon said at the Paris news conference, stressing that by "optimizing the use of our pooled resources, this joint venture will help us weather the current economic situation and protect our product offering." The (JV) is expected to generate annual revenue of more than >$12 billion based on 2008 - 2009 data and $150 million in synergies for each of the two groups by the second year.

It covers routes between North America and Europe as well as between Europe and South America and between the USA and Africa and the Middle East. On all routes between North America and Europe, between Amsterdam and India, and between North America and Tahiti, (AFA), (KLM) and (DAL) will "consensually" share capacity, revenue, costs and profits/losses. The deal can be cancelled only with a three-year notice after an initial 10-year term.

The (JV) effectively replaces two existing agreements, the one between (AFA) and (DAL) signed in 2007, and the one between (KLM) and Northwest Airlines (NWA), now part of Delta (DAL), signed in 1997. The (KLM)-(NWA) deal was the first transatlantic (JV) between two carriers. "We know from experience that the success of a (JV) calls for shared vision and long-term commitment, the simplest of operating rules and fair sharing of revenues and costs," (KLM) President & CEO, Peter Hartman emphasized. The (JV) will not lead to the creation of a subsidiary, he said.

The (USA) Department of Transportation granted the SkyTeam (STM) partners expanded antitrust immunity last year and "other competition authorities have received the same information" as USA regulators, Gourgeon said, adding that he is not worried the deal will be blocked by the European Commission (EC). Alitalia (ALI) is interested in joining but first must receive anti-trust immunity (ATI), he said. (ALI) was included in the (STM) (ATI) but went bankrupt soon after. (ATI) cannot be transferred from a bankrupt company to a new company.

Gourgeon insisted the agreement is not a virtual merger or a prelude to an equity swap and noted that in the current environment, he prefers to preserve the group's cash position. (DAL) CEO and former Northwest (NWA) CEO, Richard Anderson added, "What we discovered over the years is that there is no need to make an equity investment because we can obtain all the benefits without doing so."

Owing to the global economic downturn and the depression in the cargo market, China Southern Airlines (GUN) has decided to postpone the launch of its cargo joint venture (JV) with Air France (AFA)/(KLM), according to (GUN) Chairman, Si Xianmin. "Based on the original plan, our cargo (JV) with (AFA)/(KLM) should have been launched in the first quarter. But we have to reconsider this plan after taking the current market situation into account," Si said.

Last June, (GUN) signed a framework agreement with (AFA)/(KLM) to launch a cargo joint venture in which it would hold 75%. "AE Cargo" was expected to operate 10 airplanes initially, (GUN) President, Liu Shaoyong said at the time. But now it was revealed that General Manager, Tan Wangeng said during an internal discussion that both
(GUN) and (AFA)/(KLM) believe that "it is not a good time to launch the cargo (JV) now." (GUN) should have taken delivery of four 777F freighters and one converted A300 by now but has decided to push back two of the 777s until year end and the remaining airplanes to 2010.

There was no indication when the joint venture might be back on the agenda. "Generally speaking, the cargo market is still quite slack and we don't think it will recover this year," Tan said.

(KLM) appointed Cabot Aviation to re-market 13 737-300s/-400s to be phased out between 2010 and 2012.

777-206ER (37582, PH-BVC), delivery.

June 2009: Air France (AFA)/(KLM) flew 16.41 billion (RPK)s traffic in May, down -8.1% from the year-ago month. Capacity fell -5.7% to 21.24 billion (ASK)s, lowering load factor -2 points to 77.3% LF.

China Southern Airlines (GUN) and (AFA)/(KLM) have postponed the launch of their cargo joint venture indefinitely owing to the rapid slump in the global cargo market, (GUN) Chairman, Si Xianmin said. The original plan targeted a launch in the first quarter, but last month, Si said the companies decided to delay "after taking the current market situation into account." He said, "We haven't given up on it, but its launch has to depend on when the cargo market can recover. So far we don't have a specific timetable for it." He predicted that cargo market recovery will be later than passenger recovery. "If the international passenger market can recover next year, then cargo market recovery will be later than that," he said. (GUN) was set to hold a 75% stake in the joint venture, which was slated to operate 10 747s and A330s within two years. It is the only one of China's big three that does not operate a cargo subsidiary, although China Eastern Airlines (CEA)'s China Cargo Airlines (CKK) and Air China's (BEJ)'s Air China Cargo (CAO) each have suffered large losses.

Air France Industries (AFI)/ KLM Engineering & Maintenance and AirAsia X (ASX) signed a contract covering component support for its fleet of A330-300s. (ASX) ordered 25 of the type and has taken delivery of two. The remainder will enter service between now and 2013. (AFI)/(KLM) E&M said it will examine the possibility of developing local capabilities at its Singapore logistics center "to further enhance its support to (ASX) and help sustain (AFI)/(KLM) E&M operational activities on similar strategic contracts throughout the region, notably with the carriers IndiGo (IGO) and Kingfisher (KFH) [Airlines]."

The intent to develop its Singapore logistics center is part of (AFI)/(KLM) E&M's strategy of "customized services, expertise and proximity" that includes creation of new joint ventures. It announced participation in two new (JV)s at the Paris Air Show and confirmed that it increased its stake in Miami-based Aero Maintenance Group to 81.4%.

(AFI)/(KLM) E&M also announced a five-year component support contract from Canadian charter airline Enerjet (ENJ) for its fleet of 737NGs. Support will be offered by the joint Component Services Program of Boeing (TBC) and (KLM) E&M.

(AFI) and (KLM) (E&M) are confident they will be able to maintain a positive operating result this year despite the downturn in the airline industry and consequent contraction of (MRO) contracts. "It will be a challenge, and results could be affected by the currency exchange rates, but we believe we are well positioned to sustain our operational performance," (AFI) President, Alain Bassil said at the Paris Air Show earlier this month. (AFI) and (KLM) (E&M) combined posted a +51% year-over-year increase in operating income to €95 million/$132.5 million for the fiscal year ended March 31 owing mainly to strong activity in their higher margin engine and component support activities. Revenue inched up +0.5% to €2.98 billion. Third-party work represented 34% of revenue and was up +3% on the prior year. "The crisis is giving rise to new opportunities that can offset the market downturn," Bassil stated. He explained that owing to the recession, some airlines are forced to postpone investment in fleet renewal and continue to operate airplanes that have reached maturity and need more maintenance, while carriers lacking the critical competitive mass to carry out some maintenance tasks increasingly are turning to subcontracting. A third pocket of growth is in emerging markets, "where recent airplanes in operation are starting to age and hence need more and more maintenance," he said. Regions with growth perspectives include the Middle East, India and China. (KLM) (E&M) Executive VP, Peter de Swert contended that growth also will come from taking market share from independent (MRO) providers "because they do not have their own fleet as a stable basis for activity and thus they are more exposed to the crisis." On the other hand, Original Equipment Manufacturers (OEM)s are stepping up their after-sales efforts in order to offset falling sales and margins, he noted.

The (MRO) division of the (AFA)/(KLM) Group earlier this month launched a common website detailing joint offerings and solutions. But for the time being, (AFI) and (KLM E&M) will maintain their own brands. "It is very difficult to find a new name for two companies that have a very strong brand recognition in the market," Head of Sales, Rob Pruim said.

(KLM) took delivery of the third of eight 777-300ERs. The fourth 777-300ER is scheduled to join the fleet this summer and will feature the new SkyTeam (STM) livery.

July 2009: Air France (AFA)/(KLM) flew 17.07 billion (RPK)s traffic in June, down -6.4% from the year-ago month. Capacity fell -5% to 21.25 billion (ASK)s and load factor dropped -1.1 points to 80.3% LF.

Air France (AFA)/(KLM) flew 17.07 billion (RPK)s traffic in June, down -6.4% from the year-ago month. Capacity fell -5% to 21.25 billion (ASK)s and load factor dropped -1.1 points to 80.3% LF.

Citing sharp declines in volume and unit revenue for both passenger and cargo transport, (AFA)/(KLM) announced a -€431 million consolidated net loss in its fiscal first quarter ended June 30, a marked deterioration from the +€132 million profit earned in the year-ago period. Results were reported on a pro forma basis and include the addition of Martinair (MTH), which (AFA)/(KLM) now wholly owns, but exclude its 25% stake in Alitalia (ALI). Total group revenue fell -20.5% to €5.17 billion, comprising a -18.7% drop in passenger revenue and a -41.5% plunge in cargo. Operating costs declined -10.1% to €5.66 billion.

Operating result was affected by a negative fuel hedging impact of €252 million and swung from a +€201 million profit in the year-ago quarter to a -€496 million loss. The passenger business suffered a -€141 million operating loss excluding the hedging impact while cargo lost -€253 million. "Despite this difficult environment, the group benefits from a high level of liquidity of €5.7 billion, including €1.2 billion in credit facilities," it said while revealing it is undertaking a review of its medium-haul network "both in terms of destinations and products" and that changes will be implemented at the beginning of 2010. Cargo capacity will be reduced by a further -5% in the winter schedule with the grounding of four freighters, taking to 10 the number of airplanes removed from the cargo fleet since the start of the crisis.

Passenger traffic (RPK)s slipped -5.8% to 50.47 billion on a -4.7% reduction in capacity to 63.58 billion (ASK)s, lowering load factor -0.9 point to 79.4% LF. Unit revenue fell -14.8% to 6 euro cents and yield lowered -13.9% to 7.56 euro cents on a "particularly pronounced" decline in premium class unit revenue but a "more resilient" economy performance. Unit cost was down -4% to 6.46 euro cents.

The group said it is expecting a further deterioration in passenger unit revenue in the current quarter, albeit at a slower pace than the first, and a stabilization in the third and fourth quarters relative to the year-ago period.

The Air France (AFA)/(KLM) Group said revenue in the fiscal first quarter ended June 30 plunged -20.5% year-over-year to €5.19 billion/+$7.37 billion, reflecting continuation of the January through March trend and "in line with our expectations."

Revenue in the passenger business fell -18.7% to €4.01 billion on the back of a -4.7% reduction in capacity, a -5.8% drop in traffic and a -14.5% decline in yield. Cargo revenue plummeted -41.5% to €544 million on a -22.7% decrease in traffic and -17.2% cut in capacity. Unit revenue was down -25.1%.

The company maintained its "assumption of a more limited deterioration" in the current quarter and stability in the final two quarters, with the possibility of a slight improvement at the end of the year compared with the second half of the fiscal year ended March 31.

WestJet (WJI) and Air France (AFA)/(KLM) launched their interline partnership, allowing (AFA)/(KLM) passengers to connect to Calgary - Vancouver (WJI) flights as well as flights from both cities to Edmonton. In February, the airlines said they had signed a Memo of Understanding (MOU) signaling their intention to code share by late 2009 or early 2010. (WJI), which long has sought to expand its international reach via interline partnerships, also has an agreement to cooperate with Southwest Airlines (SWA) but implementation has been postponed. (WJI) Executive VP Commercial Distribution, Hugh Dunleavy said the interline services made available are just the "first step in our strategic partnership" with (AFA)/(KLM), adding, "Starting with only three Canadian cities allows us to take a measured and thoughtful approach to implementation, with the intent to expand this travel to our entire Canadian network."

August 2009: Air France (AFA)/(KLM) flew 19.45 billion (RPK)s in July, down -3.3% from the year-ago month. Capacity fell -4.1% to 22.86 billion (ASK)s, lifting load factor +0.7 point to 85.1% LF.

(AFA)/(KLM) withdrew from the tender process for privatization of (CSA) Czech Airlines, stating that in the current economic environment it believes "(CSA) might focus on developing and implementing a standalone recovery plan aimed at restoring its profitability." The Czech government in April selected (AFA)/(KLM) and the Unimex/Travel Service consortium as the finalists to proceed to a second round of bidding for a 91.5% stake in (CSA). The Czech-Icelandic consortium is now the only remaining bidder and has until September 15 to submit a binding offer. "We're moving forward . . . now we're doing due diligence," a consortium spokesperson told "Dow Jones." The group will submit a bid by the mid-September deadline, she added.

(AFA)/(KLM) said that it wishes to strengthen its existing partnership further with (CSA) (both are SkyTeam (STM) members) and to continue to explore any new areas of cooperation that "could be of mutual benefit." The Czech Ministry of Finance said that the public tender will move forward as scheduled without (AFA)/(KLM). (CSA) is planning significant layoffs. It said that -860 of its 4,600 employees will be let go and the cuts will affect all areas of the company.

777-306ER (35979, PH-BVD), delivery.

September 2009: Air France (AFA)/(KLM) flew 19.34 billion (RPK)s traffic in August, down -2.9% from the year-ago month. Capacity fell -4.2% to 22.81 billion (ASK)s and load factor rose +1.1 points to 84.8% LF.

The Air France (AFA)/(KLM) Group hopes to reach breakeven by the April 1 start of the 2010 to 2011 fiscal year excluding its fuel hedge contracts, CEO, Pierre-Henri Gourgeon told "Les Echos." The hedges will continue to have a negative impact, but previously announced cost cuts should stop the deterioration in cash flow, he said, adding that he does not expect a return to 2008 traffic levels until 2012. Gourgeon insisted that (AFA) is not evolving toward a low-cost service concept on its medium- and short-haul network, but "passengers are moving toward the low-cost. We will continue to offer a classic service, though with certain adaptations. We do not intend to remove the front of the cabin. There are still passengers that wish more comfort." The network will be adapted to save money, he confirmed. For instance, from Paris Charles de Gaulle, (AFA) will be operating fewer frequencies with larger-capacity A321s instead of A320s beginning in November. It lost -€431 million/-$635.9 million in its fiscal first quarter ended June 30.

The (AFA)/(KLM) Group will trim winter capacity (ASK)s by -2% year-over-year, comprising a -1.8% reduction in its long-haul network and a -2.9% cut in medium-haul flying. (AFA) and its subsidiaries will lower winter capacity by -1.7%, while (KLM) will cut by a more comprehensive -4%. The carriers insisted that connectivity at their Paris Charles de Gaulle (CDG) and Amsterdam hubs will be maintained.

(AFA) said it will rationalize its Latin American and Asian flights, implement transatlantic efficiencies thanks to its joint venture with Delta Air Lines (DAL) and reduce frequencies to New York (JFK), Dubai (DXB), and Johannesburg (JNB). It will serve those three destinations daily with its first three A380s, which are scheduled to enter service on November 23 to (JFK), January 18 to (DXB) and in early March to (JNB). Capacity will increase to Havana and Punta Cana and will remain unchanged on Indian Ocean routes.

(ASK)s on (AFA)'s medium-haul network will be down -1.1%, and it said the "first effects of capacity reorganization planned for summer 2010 can already be seen on European routes." Frequencies from (CDG) to Amsterdam, Barcelona, Geneva, Madrid, Munich, Moscow Sheremetyevo, and Rome Fiumicino will be cut "without impairing the quality of connections with long-haul flights, so as to use larger capacity airplanes which are more efficient." Flights also will be reduced to Verona, Dublin, Birmingham, and Edinburgh. Service from London City to (CDG), Strasbourg, Nice and Geneva will be discontinued, but there will be a new twice-daily flight to Nantes.

Domestic capacity will be reduced by -3.2%, with "major" capacity adjustments at Paris Orly, closure of services from Clermont-Ferrand to Biarritz, Lille, Marseille, Strasbourg, and Toulouse and fewer frequencies on Bordeaux - Nantes, Lyon - Nice, and Lyon - Bordeaux routes.

(KLM) will equip its entire intercontinental fleet with a new "comfort zone" in economy cabins, offering passengers up to 10 cm/4 inch more legroom and back supports that can recline twice as far as standard seats.

The carrier's 777-200ERs and 747s offer 31-inch pitch in economy (Y) and its A330s 32 inch. The comfort zone will be located at the front of the cabin and will be available starting in December. Each wide body will be fitted with 35-40 of the new seats. The service in economy (Y) comfort will be identical to standard economy (Y).

Depending on the distances involved, the price for the new seats will be €80 to €150/$116.96 to $219.31 for a single leg. Flying Blue Platinum members and passengers traveling on a full-flex economy class ticket can book comfort seats without surcharge.

(KLM) said it was introducing the product "in response to customer demands for greater comfort and more choice in economy (Y) class on intercontinental flights." Conversion work already has begun.

Air France (AFA) Industries and (KLM) Engineering & Maintenance extended its contract with Virgin Atlantic Airways (VAA) for heavy airframe maintenance on 747-400s for one additional year through 2011. It also announced that its (CRMA) subsidiary was named a primary repair source on the Engine Alliance (GP7200) TCF and combustion chambers by (GE). Air France (AFA) Industries and (KLM) Engineering & Maintenance signed a Total Care Support contract with Midex Airlines (MIX) of Abu Dhabi covering its 747-200F.

Amsterdam Airport Schiphol said it will not raise its airport charges on April 1, 2010, "in view of the current economic situation." It set its charges as of April 1, 2009, in late 2008 and said those were reduced by an average -10% from the prior year.

October 2009: (KLM) celebrates 90th anniversary!

Air France (AFA)/(KLM) flew 17.35 billion (RPM)s traffic in September, a -3.7% fall from the year-ago month. Capacity was down -4.9% to 21.19 billion (ASM)s and load factor lifted +1 point to 81.9% LF.

(AFA)/(KLM) will begin charging economy class (Y) passengers for a second checked bag on flights between Europe/North Africa and the USA next month. The second piece of luggage will cost €50/$74.80 on flights from Europe and $50 on flights from the USA. Premium loyalty program members will be exempt, and (AFA)/(KLM) is offering a -20% discount to those checking in and paying online.

For the first time in ten years, (KLM) will fly its 777-300ERs (425 passengers) to Denpasar, Bali, Indonesia. (KLM) also flies to Jakarta.

November 2009: Air France (AFA)/(KLM) flew 17.68 billion (RPK)s traffic in October, down -4.1% from the year-ago month. Capacity dropped -5.6% to 21.41 billion (ASK)s and load factor increased +1.3 points to 82.5% LF.

Claiming that the downturn "has led to behavioral changes among our customers which are likely to persist beyond the recovery," (AFA)/(KLM) proposed an enlarged voluntary redundancy program affecting 1,700 jobs next year as it announced a -€147 million/-$219.3 million loss in its fiscal second quarter ended September 30, reversed from a +€27 million surplus last year.

CEO, Pierre-Henri Gourgeon said (AFA)/(KLM) "responded quickly" to the recession and is "adapting more rapidly than expected." It is targeting €700 million in cost cuts this fiscal year and he cited the improvement from the first quarter (a -€431 million loss) as evidence that "all these measures are starting to have a positive impact."

Nevertheless, "lack of visibility over the timing and strength of the economic recovery means we must pursue our efforts in terms of cost reduction," he said, necessitating the additional job cuts as (AFA)/(KLM) pursues full-year operating breakeven. In September, it announced a voluntary redundancy program comprising 1,500 positions.

Second-quarter revenue plunged -19.2% to €5.61 billion and the operating result swung to a -€47 million loss from a +€391 million profit in the three months ended September 30, 2008. (AFA)/(KLM) said it also took a €179 million charge related to pre-2009 fuel hedges and noted it would have been in the black on an operating level excluding that charge. Costs fell -13.6% to €5.65 billion. Its passenger segment reported a +€140 million operating profit despite a -17.2% fall in revenue, but cargo lost -€127 million.

Group airlines flew 56.14 billion (RPK)s during the quarter, down -3.3%, against a -4.4% cut in capacity to 66.86 billion (ASK)s. Load factor rose +0.9 point to 84% LF. Yield was down -14.6% to €7.37 cents and unit revenue declined -13.6% to €6.19 cents. (CASK) dropped -7.8% to €6.14 cents. (AFA)/(KLM) finished the quarter with 646 airplanes, 611 of which were in operation. Winter season capacity is scheduled to fall -2% year-over-year.

Fiscal first-half loss of -€573 million compared to a +€176 million profit in the year-ago period. Operating result reversed to a -€543 million deficit from a +€592 million profit.

Amadeus reached a 10-year agreement with Air France (AFA) and (KLM) for the implementation and operation of its Altea Inventory system. The solution will replace the carriers' legacy inventory systems by year end, and will be fully integrated with the Altea Reservation sales platform.

(KLM) operated the first biofuel demonstration flight in which passengers were aboard, flying a 747-400 partially powered by camelina-derived fuel from Amsterdam Schiphol (AMS). The flight, carrying 40 select passengers including (KLM) President & CEO, Peter Hartman and a number of Dutch officials, stayed in the air for about 1 hour before returning to (AMS). One of the airplane's engines was powered by a 50/50 mixture of traditional jet fuel and camelina-based fuel. Honeywell (SGC) subsidiary, (UOP) converted the plant-based crude oil to biofuel and then blended it with jet fuel.

Previous biofuel test flights operated without passengers, were conducted by Japan Airlines (JAL), Continental Airlines (CAL) and Air New Zealand (ANZ).

Hartman said the industry has "demonstrated" that clean, sustainable air transport is technically feasible and called on governments and industry "to join forces to ensure that we quickly gain access to a continuous supply of biofuel." (KLM) also announced it has partnered with North Sea Petroleum and Spring Associates to establish SkyEnergy, a consortium committed to "accelerating development [toward achieving] a market breakthrough" for biofuel in aviation.
SEE ATTACHED - - "KLM-2009-11 BIOFUEL."

December 2009: Air France (AFA)/(KLM) flew 15.47 billion (RPK)s traffic in November, down -3.2% from the year-ago month. Capacity fell -2.9% to 19.83 billion (ASK)s and load factor dropped -0.2 point to 78% LF.

(KLM) and Garuda Indonesia (GIA) signed agreements to code share on each other's flights between Singapore (SIN) and Denpasar (DPS) and to cooperate on component maintenance. (KLM) offers a thrice-weekly, Amsterdam - (SIN) - (DPS) service, increasing to four next month. (GIA) operates a daily, (SIN) - (DPS). In addition, (KLM) will outsource fan cowl maintenance to Garuda Maintenance Facilities AeroAsia.

(KLM) completed installation of its new Economy Comfort premium economy product on 61 long-haul airplanes and officially launched the offering. Seats offer 35 inch pitch instead of the standard 31 inch. An average of 34 to 40 Comfort seats will be offered, depending on the airplane type.

(GE) said that (KLM) Engineering & Maintenance selected (GE) Sensing & Inspection Technologies' USM Go inspection device to perform nondestructive airplane and engine testing.

737-7K2 (38053, PH-BGH), delivery.

January 2010: Air France (AFA)/(KLM) said December unit revenues "continued their recovery thanks to a more marked improvement in long-haul premium traffic" but still were down from year-ago levels. The group flew 16.07 billion (RPK)s traffic last month, a -4.6% decrease year-over-year, against a -5.5% cut in capacity to 20.16 billion (ASK)s. Load factor rose +0.8 point to 79.7% LF.

February 2010: Air France (AFA)/(KLM) said January unit revenue fell year-over-year. It flew 15.87 billion (RPK)s traffic, down -1.6%, against a -3.4% decline in capacity to 20.34 billion (ASK)s. Load factor rose +1.4 points to 78% LF.

The Air France (AFA)/(KLM) Group reported a net loss of -€295 million/-$404.6 million for its fiscal third quarter ended December 31, 2009, a +41.9% improvement compared to a loss of -€508 million in the year-ago period when results were impacted severely by fuel hedge losses.

An operating loss of -€245 was similar to last year's deficit of -€243 million, despite a -16% drop in revenue to €5.2 billion. Although the passenger airline division's operating loss widened to -€184 million from -€129 million in the year-ago quarter, this was offset partially by a stronger performance by the cargo division, which saw its operating loss reduced to -€29 million from -€83 million in the year-earlier period. The maintenance division posted a +€12 million operating profit, down -7.7%.

The group's third-quarter passenger revenue fell -14.5% year-over-year to €4.03 billion on a -4.7% reduction in capacity to 61.4 billion (ASK)s. Traffic declined -4% to 49.2 billion (RPK)s and load factor inched up +0.6 point to 80.2% LF. Cost per (ASK) sank -8.9% to 6.48 eurocents but (RASK) declined -10.5% to 8.9 eurocents and yield decreased -11.2% to 7.8 eurocents. The group said the decline in unit revenue showed a notable slowdown "for the first time since the beginning of the current financial year, particularly in premium long-haul," although (RASK) remained well below the year-ago levels.

(AFA)/(KLM)'s cargo business experienced "healthier volumes and a marked improvement in unit revenues" that led to a halving of the drop in cargo revenue recorded in fiscal year's first two quarters. Third-quarter revenue still declined -26.8% to €650 million.

For the nine months ended December 31, net loss widened to -€868 million from -€332 million in the year-ago period owing to a €464 million impact from its fuel hedges as well as a -18.6% plunge in revenue to €15.97 billion. Operating loss of -€788 million compared to a +€349 million profit the prior year. (AFA)/(KLM) said it realized -€529 million in savings under its "Challenge 12" program.

(AFA)/(KLM) said its fiscal fourth-quarter operating loss should be similar to last year's -€535 million pro forma deficit. It expects a return to breakeven operating results in Fiscal Year (FY) 2010 to 2011, excluding the impact of pre-2009 hedges.

INCDT: A (KLM) 737-300 took off from Taxiway B at Amsterdam Schiphol airport on the evening of February 11 instead of using Runway 36C. Flight KL1369 was bound for Warsaw and landed on schedule. Dutch investigators opened an inquiry into the incident, which the Dutch Safety Board described as "serious."

737-7K2 (30364, PH-BGI "Vink/Finch"), delivery.

March 2010: Air France (AFA)/(KLM) said that poor weather and last month's four-day air traffic controller (ATC)s strike had an estimated -€22 million/-$30 million impact on revenue. (AFA)/(KLM) flew 13.98 billion (RPK)s traffic in February, down -0.6% year-over-year, against a -5% drop in capacity to 17.99 billion (ASK)s. Load factor rose +3.5 points to 77.7% LF.

(AFA)/(KLM) said it plans to reduce its summer schedule capacity by just -0.3% year-over-year, comprising a +8% lift in long-haul (ASK)s and a -4% reduction in the medium-haul network, as "tentative signs of recovery, depending on the country, have been perceived."

(AFA)/(KLM) will add Abu Dhabi (five-times-weekly from May 3) and Bata (twice-weekly, via Malabo) as new (AFA)/(KLM) destinations from Paris Charles de Gaulle (CDG) and new (KLM) flights from Amsterdam to Denpasar (four-times-weekly via Singapore) and Aruba (twice-weekly). The summer program begins March 28.

(AFA)'s summer schedule comprises -0.9% fewer capacity (ASK)s than the summer 2009 program. Long-haul capacity will be up +0.1%. The airline's plan to fit its long-haul fleet (excluding in-service A380s and 777s operating to Caribbean and Indian Ocean destinations) with the new Premium Voyageur premium economy product is a factor. Long-haul capacity would have been up 3.2% without the new seats, which should be installed completely in time for the winter schedule. It will operate four A380s at that time and plans to launch new A380 service to Tokyo Narita.

The medium-haul network will be cut -3.7%. (AFA) said product simplification and a reduction to just two classes of service on medium-haul flights "has resulted in a better balance between the number of frequencies and the average size of airplanes." Sixteen airplanes will be retired from the medium-haul network. Flights from (CDG) to Munster, Trieste and Shannon will be suspended.

The domestic schedule will be cut -2.2%, with service from (CDG) to Pau, from Orly to Lannion and Limoges and from Lyon to Rouen suspended.

(KLM)'s overall capacity will rise +1% year-over-year, comprising a +2% long-haul increase and -4.5% medium-haul cut. It is raising frequencies to several Asian destinations and increasing transatlantic capacity by +1%. It will complete the retirement of its F 50s by the start of the schedule, and by the end it will have introduced an additional 10 new EMB-190s over the previous year. It also is replacing 737 Classics with 737NGs.

Air France (AFA)/(KLM) intends to maintain its strong position in Africa and a strategy of continuous growth despite the economic downturn and increased competition, Senior VP Africa & Middle East, Etienne Rachou said. "In terms of the number of destinations, frequencies and product, we are the number one to Africa. We will do everything we can to keep our leadership position," he said yesterday in Brussels.

(AFA)/(KLM) claims a 30% share of the passenger market between Europe and Africa. It operates some 380 weekly flights from its Paris Charles de Gaulle (CDG) and Amsterdam hubs to 43 destinations on the continent, of which 29 are unique to (AFA), 10 are served only by (KLM) and four by both. Rachou refrained from detailing the position of its closest competitor, but in January the Lufthansa Group stated that its airlines (Lufthansa (DLH), Austrian Airlines (AUL), Brussels Airlines (DAT)/(EBA), Swiss International Air Lines (CSR) and bmi (BMA)) operated to 31 destinations in 27 African countries. During the summer schedule, (AFA) will launch A319 all-premium flights to Bata and increase capacity (ASK)s to the continent by +2.9%. (KLM) will grow capacity +0.9%.

"Competition to Africa is not new, and we're not particularly afraid. We cannot deny that the competition is getting more challenging," Rachou admitted, noting the growing competition is coming "not only" from European rivals but from airlines across Africa and the Middle East as well as USA carriers, "which have rediscovered Africa. It's up to Air France (AFA)/(KLM) to show and sell our assets and keep our passengers happy," he said. "This is one of the reasons behind the product upgrades."

(AFA) was the first airline to introduce the A380 to Africa with a thrice-weekly, (CDG) - Johannesburg service launched February 7. When its third A380 arrives next month, it will operate the jumbo daily on the route. Other upgrades include introduction of its new premium economy cabin on its wide body fleet. It currently is available to four African destinations.

"Passenger feedback on our new intermediary cabin is very positive," Rachou said, adding that it is too early to release any figures on demand, "but it is going in the right direction. The fact that the product is being expanded throughout the fleet [777s, A340s and A330s operating from (CDG)] by the end of the year gives an indication." (AFA) introduced the new cabin last October on flights to New York (JFK). It now operates retrofitted wide bodies to 10 destinations, increasing to around 30 by June.

(KLM) will launch thrice-weekly, Amsterdam - Hangzhou service on May 8 aboard a 777-200ER.

Air France (AFA) and (KLM) will begin charging all economy (Y) passengers €55/$55 for a second checked bag on tickets sold from March 28. They previously levied that charge only on routes from Europe to the USA and Canada, and said the move is "in line with industry standards." The baggage allowance will be raised from 20 kg to 23 kg per bag, and a third piece will be charged €200/$200. Premium economy passengers will be allowed two 23 kg bags free of charge and business class (C) passengers three. Customers will receive a -20% discount if they book online. There will be exceptions on some 50 routes and for premium loyalty program members.

SEE ATTACHED "AIRLINER WORLD" ARTICLE & PHOTO RE-CABIN ATTENDANTS (CA) AND FLIGHT CREW (FC) NEW UNIFORMS - - "KLM-2010-03-NEW CA AND FC UNIFORMS."

April 2010: Volcanic ash from the Eyjafjallajokull volcano eruption on Wednesday April 14th in south-eastern Iceland caused dramatic disruption to air traffic in Europe, with many airlines cancelling services throughout the following five days owing to airspace closures but questioning whether European Union (EU) governments and Air Traffic Control (ATC) providers were overreacting.

Severe restrictions on civil flights across most of northern and central Europe remained in place until over the following weekend. This included airspace over Austria, Belgium, Croatia, the Czech Republic, Denmark, Estonia, Finland, most of France, most of Germany, Hungary, Ireland, northern Italy, the Netherlands, Norway, Poland, Romania, Serbia, Slovenia, Slovakia, Sweden, Switzerland, Ukraine, and the UK. In some areas, upper airspace was made available for limited flights. But rather than easing, the restrictions spread on Sunday April 18: 11 airports in Spain closed as did Bulgarian airspace.

(IATA) (ITA)'s "initial and conservative" estimate of the financial impact on the airline industry is at least $200 million per day in lost revenue. It added that carriers would incur further costs for rerouting airplanes, maintaining parked airplanes at various airports and providing care for stranded passengers. The Association of European Airlines (AEA) said 63,000 flights were cancelled over four days.

The (AEA) and Airports Council International Europe jointly called for an "immediate reassessment of flight restrictions," asserting that non-passenger test flights conducted by several European airlines "have revealed no irregularities at all." The organizations questioned the "proportionality of the flight restrictions currently imposed."

(KLM) and Lufthansa (DLH) were among the carriers that performed test flights over the following weekend. (KLM) operated one on Saturday and was scheduled to operate nine more later. The technical inspection conducted after Saturday's 737-800 flight, which climbed to an altitude of 41,000 ft, "revealed that no problems had been encountered and that the quality of the atmosphere is in order," (KLM) said. (KLM) President & CEO, Peter Hartman estimated the combined financial impact of lost revenue and costs for stranded passengers at €5 million/$6.8 million - €10 million daily. "This is rather dramatic," he told Dutch media. He confirmed that (KLM) does not have insurance that covers this event.

(SAS) warned it would lay off up to -2,500 employees temporarily in Norway, if airplanes remained grounded. It later announced that nearly all of its flights would be cancelled, though it did say "a few domestic flights" would operate in Norway.

Several European carriers, including Finnair (FIN) and Lufthansa (DLH), grounded their entire fleets. Ryanair (RYR) said it had cancelled all scheduled flights to/from the UK, Ireland, Denmark, Finland, Norway, Sweden, Belgium, the Netherlands, France, Germany, Poland, and the Baltic States.

Eurocontrol said there were 10,400 flights in European airspace two days after the eruption compared to 28,000 normally and approximately 5,000 on the Saturday April 17 compared to 22,000 on a normal Saturday.

The situation forced airlines in North America and Asia to cancel a high percentage of their Europe-bound flights. The USA Air Transport Association (ATA) said USA carriers cancelled 282 of 337 scheduled Saturday April 17 transatlantic flights. Meanwhile, hundreds of thousands of passengers were stranded at airports across Asia over the weekend as airlines in the region halted nearly all flights to Europe, though some to southern Europe were still operating.

SEE ATTACHED "AIRLINER WORLD" MAGAZINE ARTICLE ON THE VOLCANO ERUPTION IN ICELANDAIR (ICE) - - "ICE-2010-04-VOLCANO ERUPTION-A/B/C/D/E."

SEE ATTACHED - - "KLM-2010-04-VOLCANIC ERUPTION."

Air France Industries and (KLM) Engineering & Maintenance signed a one-year deal with Pegasus Airlines (PGS) for maintenance of nine (CFM56-7B)s on a turnkey basis.

May 2010: Air France (AFA)/(KLM) flew 14.28 billion (RPK)s traffic in April, a -15.9% drop from the year-ago month. Capacity was down -15.3% to 17.85 billion (ASK)s and load factor fell -0.6 point to 80% LF.

The Air France (AFA)/(KLM) Group reported a heavy net loss of -€1.56 billion/-$1.93 billion for its fiscal year ended March 31, nearly double its -€814 million deficit in the prior year, but management reiterated that it believes a breakeven operating result is possible in the current financial year excluding the impact of pre-2009 fuel hedges and subject to costs related to the closure of European airspace owing to volcanic ash.

The group estimates that the Icelandic volcano-related disruptions April 15 to 21 caused -€260 million in lost revenue with a -€160 million impact on its operating result.

CEO, Pierre-Henri Gourgeon said, "2009 to 2010 will go on record as our 'annus horribilis.' The global economic crisis had a profound effect on the entire airline industry. In addition, (AFA)/(KLM) had to contend with the tragedy" of the A330-200 that crashed last May 31, killing 228. The results for Fiscal Year (FY) 2009 to 2010 include a negative impact of -€637 million linked to pre-2009 fuel hedges.

Revenue fell -15% year-over-year to €20.99 billion, including a -13.6% decline in passenger revenue to €16.27 billion. Total operating expenses dropped -14.8% to €13.24 billion. Operating loss deepened to -€1.28 billion from -€186 million in the prior year.

Passengers carried dipped -4.1% to 71.4 million and (RPK)s traffic fell -3.2% to 202.5 billion on a -4.3% cut in capacity to 251.1 billion (ASK)s. Passenger load factor improved +1 point to 80.7% LF. Yield was down -10.8% on the previous year to €0.0765 and (RASK) decreased -9.7% to €0.0615. (CASK) slid -4.6% to €0.0646.

For the fiscal year's fourth quarter ended March 31, (AFA)/(KLM) posted a -€691 million net loss, up +44.3% from a -€479 million deficit in the year-ago period. Quarterly revenue slipped just -0.8% year-over-year to €5.02 billion as both passenger and cargo demand picked up and restructuring of the cargo business launched in the previous quarter started to bear fruit. Unit revenue was up +2.7% per (ASK) and +30.9% per (ATK).

Operating costs dipped -1.4% to €5.52 billion and -4.1% excluding fuel, reducing operating loss for the quarter -7.1% to -€497 million, of which -€381 million was attributed to passenger activity. Excluding the negative impact of fuel hedges, the operating loss would have been -€324 million.

The company is in negotiations with the relevant authorities concerning the eventual level of compensation for the volcano disruptions, Gourgeon said, noting that (AFA)/(KLM) also is "actively working with the authorities to define a comprehensive and pragmatic approach to the volcanic ash risk so as to avoid the repetition of unnecessary flight operation stoppages in the future."

STG Aerospace signed a supply deal with (KLM) to supply its SafTGlo photo-luminescent exit signs on board (KLM)'s fleet of 25 737s.

June 2010: (KLM) will launch a five-times-weekly scheduled service between Amsterdam and Kigali with an intermediate stopover in Entebbe October 31 aboard an A330-200 in two-class configuration. Kigali will be (KLM)'s 64th intercontinental destination. (KLM) will resume thrice-daily, Amsterdam - Budapest services on October 29, which it previously served on a code share with Malev (HGA).

Air France Industries (AFI) and (KLM) Engineering & Maintenance (E&M) reached a two-year renewal of its contract with AeroMexico (AMX) to maintain its fleet of five 777s. (AFI)/(KLM) (E&M) won a five-year contract with Saga Airlines (SGZ) to provide maintenance for (SGZ)'s (CFM56-7B) engines powering its 737 fleet. Maintenance will be provided on a turnkey basis.

737-7K2 (38054, PH-BGK "Noordsee Stormvorgl/Fulmar") delivery, ex-(N1786B).

July 2010: Air France (AFA)/(KLM) flew 17.88 billion (RPK)s traffic in June, up +4.7% from the year-ago month. Capacity rose +0.4% to 21.33 billion (ASK)s and load factor improved +3.5 points to 83.8% LF.

Boosted by a €1.03 billion capital gain from the sale of its 23.1% stake in Amadeus, the (AFA)/(KLM) Group posted a net profit of +€736 million/+$953 million for its fiscal first quarter ended June 30, reversed from a -€426 million deficit in the year-ago period.

In addition to the gain from the Amadeus Initial Public Offering (IPO), (AFA)/(KLM) cited a “strong recovery” in both passenger and cargo traffic, with a “strong rise in unit revenues, especially in cargo.”

Revenue for the three months rose +10.7% year-over-year to €5.72 billion. (AFA)/(KLM) said that without the impact of the airspace closures, revenue would have lifted +15.9%. Operating costs increased +3.3% owing in large part to a +26.8% increase in fuel costs to €1.44 billion. Excluding fuel, costs declined -2.6%. Operating loss narrowed to -€132 million from -€496 million a year ago.

The group said the closure of European airspace in April “masked” the recovery in passenger traffic. Quarterly traffic declined -2.3% to 49.28 billion (RPK)s, but was up over >4% in both May and June versus last year. Capacity was reduced -4.9%, leading to a +2.2 point gain in load factor to 81.5% LF.

Unit revenue recovered to levels “close to those of 2007 to 2008," it said. (RASK) was up +14.8% to €0.0689 and yield rose +11.8% to €0.0845.

Passenger revenue heightened +8.8% to €4.37 billion. The operating loss of the passenger business narrowed to -€142 million from -€338 million in the year-ago period. Without the impact of the airspace closure, it would have been at breakeven, (AFA)/(KLM) said.

(AFA)/(KLM) and Martinair (MTH) agreed to pay €87 million/$110 million to settle civil antitrust claims in the USA related to price-fixing in the air cargo business on flights to/from the USA between 2000 and 2006.

The agreement is subject to court approval. (AFA)/(KLM) and (MTH) pleaded guilty in a USA federal court in 2008 and paid $350 million in criminal fines "for participating in a multi-year conspiracy to fix prices for air cargo rates."

The civil actions, which have been brought as class actions, were filed initially in 2006 after the USA Department of Justice and the European Commission (EC) initiated investigations of air cargo price-fixing. The investigation by the (EC) remains pending.

LAN Cargo (LCO) has become the 12th operator to join Boeing (TBC)’s 777 component services program, a venture established by (TBC) and Air France Industries (AFI)/(KLM) Engineering & Maintenance. The program provides 24-hour access to inventory, including avionics, actuators and precision mechanical assemblies.
Dale Wilkinson, a VP for Boeing Commercial Airplanes (TBC), in
a statement says, “The 777F freighter provides a competitive edge for (LCO)’s operation, and the 777 component services program will further extend that advantage. “Additionally, (LCO)will stabilize its long-term 777F maintenance budget planning,” he adds.

(LCO) took delivery of its first 777F freighter in 2009 and currently operates two of the type. A third is scheduled to be added to the airline’s fleet in 2012.

According to Boeing (TBC), Air France Industries (AFI) and (KLM) Engineering & Maintenance support more than 1,230 airplanes
operated by 150 carriers.

Air France Industry (AFI)/(KLM) (E&M) was selected by Air Canada (ACN) for maintenance support of the airline’s (GE90-110/115) engines powering its 18 777-200LR and 777-300ER airplanes. The exclusive 12-year contract covers on-site/on-wing operations, shop visits, engine components, spare engine support and engine engineering.

August 2010: Air France/(KLM) Group 2009 Passenger traffic = 202,455 Million (RPK)s (-3.2%) (World #2 highest) (#3); Total employees = 104,721 (-2.1%) (world airlines' #1 highest total). SEE ATTACHED - - "KLM-2010-08-WLD RPK-2009."

(AFA)/(KLM) flew 19.7 billion (RPK)s traffic in July, up +1.2% from the year-ago month. Capacity stayed flat at 22.86 billion (ASK)s, while load factor climbed +1.1 points to 86.2% LF.

Kenya Airways (KEN) leased a 737-300 from (KLM) for two months. It will initially be used to boost services on (KEN)'s Nairobi - Mombasa route.

September 2010: SkyTeam (STM) alliance members China Southern Airlines (GUN) and Air France (AFA) signed an agreement to launch a joint venture (JV) on the Paris – Guangzhou route beginning November 1 that includes revenue sharing. (AFA) said in a statement that the two airlines will have “joint governance” of the (JV) and a “management committee, with five working groups, will be in charge of implementing it in the fields of network management, revenue management, sales, produces and finance.”

Air France/(KLM) Group CEO, Pierre-Henri Gourgeon said, “This (JV) agreement strengthens the links which already exist between (AFA) and (GUN). It consolidates our position in one of the most buoyant regions of the world and enables us to offer our customers improved service while maintaining costs. In this way, the Air France (AFA)/ (KLM) Group is confirming its rank as European airline leader to China.”

(GUN) President & CEO, Tan Wan Geng added, “The (JV) will enable both airlines to improve their competitiveness on a very buoyant market.”

Since 2004, (AFA) and (GUN) have been operating code share flights between Paris and Guangzhou, thanks to an agreement signed in 2003, according to (AFA). Within the framework of this (JV), “several other connecting destinations beyond these two cities will gradually be introduced on a code share basis,” said (AFA).

China Eastern (CEA) is also expected to become a formal member of the SkyTeam (STM) alliance next year and is negotiating with (AFA)/(KLM) about forming a (JV) on its Shanghai – Paris and Shanghai – Amsterdam routes. It is reported that (AFA) would sign a similar (JV) agreement with (CEA) on the Shanghai – Paris route at the end of 2011.

(KLM) has been placing its code on (GUN)’s daily, Guangzhou – Amsterdam service on board a 777-200 since 2001. (KLM) has also operated a (JV) with (GUN) on its Beijing – Amsterdam route since June 2006.

(GUN) signed a framework agreement with Air France (AFA)/(KLM) to launch a cargo (JV) in 2008, which was postponed owing to the global financial crisis. (KLM) Senior VP Route Network, Pieter Elbers noted in May that both carriers would formally launch the cargo (JV) once market conditions are appropriate. He also didn’t rule out the possibility of seeking a cargo (JV) with (CEA).

October 2010: Air France (AFA)/(KLM) Group raised its financial forecast for its fiscal year ending March 31, 2011 and stated that “given the revenue performance of recent months, together with the current level of forward bookings,” it is now expecting a “positive” operating result except in the case of a major adverse event.

At the end of July, the group predicted it would reach breakeven at the operating level excluding the impact of air space closure in April. It estimated the loss due to the volcanic ash crisis was -€158 million/-$221.4 million. The group is scheduled to report its first-half earnings on November 17.

(KLM) announced it will increase capacity (ASKs) by +3.3% in the winter schedule compared with winter 2009, mainly owing to a +4.1% hike in long-haul capacity whereas activity on medium-haul routes will remain practically stable (up +0.5%).

(AFA) will grow (ASK)s by +1.7%, encompassing an average +2.5% increase on long-haul routes and a -1% reduction on medium-haul routes. The most notable growth will be to Asia, with a +5.4% rise in (ASK)s.

Royal Jordanian (RJA) renewed its contract with Air France Industries (AFI)/(KLM) (E&M) for component and engine support for its A340s for three more years. It also signed a new contract to provide component support for its A330s, which includes repairs and access to the spares pool, with the deployment of a Main Base Kit at Amman in Jordan. In December 2009, (RJA) and (AFA)/(KLM)’ Group’s Maintenance Repair & Overhaul (MRO) unit also renewed the existing (CF6-80C) repair contract for a further three years. The engines are cared for at (AFI)/(KLM) (E&M)’s Amsterdam engine shop.

(KLM) will launch four-times-weekly, Amsterdam – Miami return service March 27, 2011 with an MD-11 with 24C seats in business class, 38CY in economy comfort and 223Y in economy. All seats are equipped with a personal screen and interactive entertainment. This relaunches (KLM)'s direct service to Miami that was suspended in September 2004.

November 2010: The Air France (AFA)/(KLM) Group reported a consolidated net profit of +€1.03 billion/+$1.39 billion for its fiscal first half ended September 30, reversing a loss of -€573 million in the year-ago period.

Current period results were net of a +€1.03 billion gain on the sale of shares in Amadeus. Net income restated for non-recurrent items was +€104 million compared to a -€509 deficit last year.

First half revenues rose +14.8% to €12.37 billion and operating income was +€444 million reversed from an operating loss of -€543 million in 2009. CEO, Pierre-Henri Gourgeon said, “In the context of a more favorable economic environment, all the strategic actions we have undertaken over the past year have enabled us to return to profit.” He noted that, despite the disruption in April, (AFA) improved its operating result “by some +€1 billion in the first half.”

In the second quarter ended September 30, net income was +€290 million after an additional provision of €127 million relating to the European Commission (EC)’s fine for air cargo price-fixing. The group posted a net loss of -€147 million in the year-ago period. Second-quarter revenue rose +18.6% to +€6.65 billion and operating costs grew at a lower rate of 7.4%, and 4.9% ex-fuel. Operating profit was +€576 million, reversed from a -€47 million loss in the year-ago period.

Both load factors and unit revenue improved in the reporting quarter owing to a recovery in demand, combined with a continued limitation of its capacity and restructuring measures implemented at its passenger and cargo divisions, (AFA)/(KLM) said. Passenger traffic was up +0.6% to 56.46 billion (RPK)s traffic with capacity reduced by 0.5% to 66.56 billion (ASK)s. Load factor gained almost one point to 84.8% LF.

Unit revenues continued to improve and are again approaching pre-crisis levels. (RASK) increased by +18.9% to 7.36 eurocents with a marked improvement in both medium- and long-haul. “On the latter, both unit revenue and traffic rose more strongly in premium than in economy (Y) class. Unit revenue in premium has, however, yet to return to its pre-crisis level,” it noted. Unit revenue per (RPK) traffic rose +17.7% to 8.68 eurocents. (CASK) rose +7.3% to 6.59 eurocents.

The operating result of the passenger business stood at +€453 million compared to a -€15 loss a year earlier and the operating result of its cargo business was in the black for the second consecutive quarter at +€7 million, reversed from a -€147 million loss in the prior second quarter.

For the first half, passenger traffic declined -0.8% to 105.74 billion (RPK)s on a -2.6% capacity reduction to 126.99 billion (ASK)s, improving load factor by +1.5 points to 83.3% LF. (CASK) rose +8% to 6.80 eurocents. (RASK) increased +17% to 7.14 cents and unit revenue per (RPK) rose +14.9% year-on-year to 8.57 eurocents. The operating profit of the passenger business was +€311 million versus a -€353 million loss a year earlier and the operating profit of its cargo business was +€18 million, reversed from a -€344 million loss in the year-ago first half.

The group upgraded its full-year outlook to an (EBIT) in current market conditions of “over >€300 million,” compared to its previous forecast that operating profit would be “positive.” It also said that in the context of its three-year plan through Fiscal Year (FY) 2013 to 2014, it has fixed financial objectives of a -3% reduction in unit costs on a constant currency and fuel price basis, an adjusted operating margin above 7%, a return to a gearing ratio of 0.5 and (ROCE) of 8% after tax.

Air France (AFA) launched flights to Bata in Equatorial Guinea (it already serves the country’s capital Malabo) and new (KLM) flights to Kigali in Rwanda via Entebbe in Uganda. These are hardly economies on the verge of joining the likes of Switzerland in terms of income, but Equatorial Guinea has oil, while Rwanda is rapidly distancing itself from an era of genocidal violence in the 1990s by instituting what the World Bank sees as some of the most dramatic economic reforms worldwide. In general, (AFA) handles most of west Africa, while (KLM) handles most of east Africa, in line with the ex-colonial links of their respective home nations.

The European Commission (EC) fined 11 airlines a total of €799 million/$1.1 billion for "operating a worldwide cartel which affected cargo services within the European Economic Area." In a statement, the (EC) said the carriers "coordinated their action on surcharges for fuel and security without discounts over a six-year period." Air France (AFA) received the largest fine at €182.9 million, followed by its affiliate (KLM) at €127.2 million. Other fines include British Airways (BAB) (€104 million), Cargolux (CLX) (€79.9 million), Singapore Airlines (SIA) (€74.8 million), (SAS) (€70.2 million), Cathay Pacific Airways (CAT) (€57.1 million), Japan Airlines (JAL) (€35.7 million), Martinair (MTH) (€29.5 million), Air Canada (ACN) (€21 million), Qantas (QAN) (€8.9 million) and (LAN) Airlines (€8.2 million).

Lufthansa (DLH) and its subsidiary Swiss International Air Lines (CSR) "received full immunity from fines under the (EC)’s leniency program, as it was the first to provide information about the cartel," the (EC) stated.

"It is deplorable that so many major airlines coordinated their pricing to the detriment of European businesses and European consumers," said (EC) VP Competition, Joaquin Almunia. "With today’s decision, the (EC) is sending a clear message that it will not tolerate cartel behavior." The (EC) charged that the "cartel members" coordinated pricing from December 1999 to February 2006.

The (EC) in late 2007 sent out official statements of objections to as many as 25 carriers regarding cargo price fixing. It said that 11 carriers originally charged were not fined.

The (EU), USA Department of Justice, Australian Competition and Consumer Commission and other authorities worldwide have been investigating anti-competitive practices in air cargo since 2005. Cargolux (CLX) President & CEO, Ulrich Ogiermann and Senior VP Sales & Marketing, Robert Van de Weg were recently indicted in a USA court on charges of conspiring to fix and coordinate certain surcharge rates on air cargo shipments to and from the USA.

In a statement, Air France (AFA)/(KLM) said it considered the level of the fine to be "disproportionate given the fact that the economic analysis demonstrated that the actions in question had no detrimental effect on the freight shippers or the freight forwarders. Moreover, the level of the fines disregards the economic hardship that the air cargo industry has suffered, and will have a distortive effect on the level playing field." It added that it intends to appeal the decision to (EU) courts. Because the level of the fine exceeds the level of provisions already taken by the company for potential cargo antitrust payments, (AFA)/(KLM) will book a charge of €127 million for the first half of its current fiscal year.

(SAS) said in a statement it has not been involved in a global cartel and the fines are disproportionate. It also plans to appeal the decision, a process that could take several years. The fines will be accounted for in (SAS)'s third-quarter earnings.

Air Canada (ACN) said in a statement it may appeal the decision and said the penalty is “more than adequately” covered by a C$125 million provision it made in 2008.

"We are highly disappointed and strongly contest the considerable level of the fines, which we believe to be disproportionate to (SAS) Cargo's actions," said (SAS) Chief Legal Officer, Mats Loennkvist. "We have cooperated fully with the (EC) during the entire investigation and, for slightly more than four years, we have disputed the (EC)'s view that (SAS) Cargo has been involved in a global cartel."

(KLM) is planning to offer space flights with the XCOR Lynx Mark II by 2014 as part of Space Experience Curaçao. (KLM) has signed up for the first space flights over the island. (KLM) says it would like to handle the promotion and sale of the tickets, which will cost 70,000 Euros/$100,000. Furthermore, (KLM) wants to promote and sell all the tickets for these space flights in the future.

The Lynx, a piloted, two seat, fully reusable, liquid rocket powered vehicle that takes off and lands horizontally. The Lynx production models (designated Lynx Mark II) are designed to be robust, multi-commercial mission vehicles capable of flying to 100+ km in altitude up to four times per day and are being offered on a wet lease basis.

Space Experience Curaçao (SXC) was founded in 2008 to lead the world changing trend in providing commercial space launch facilities and suborbital flight services from the Caribbean island of Curaçao in the Netherlands Antilles, an independent governing entity as part of the Kingdom of the Netherlands. (SXC) intends to offer suborbital space tourism flights and scientific research missions out of Space Port Curaçao. (SXC) is led by its two founders and Managing Partners, Harry van Hulten and Ben Droste, who share a wealth of personal experience in flying and testing fighter airplanes, and managing large and complex aerospace organizations and institutions. Lt General Ben Droste (retired) has amassed over 4,000 hours in high performance jet fighter airplanes including the F-16. Major Harry van Hulten, is an active F-16 fighter pilot with the Netherlands Royal Air Force; he has over >3200 hours in 42 different airplane types, of which 2500 hours are on the F-16. He is a graduate of the USA Air Force Test Pilot School at Edwards Air Force Base (AFB). He spent an extra two years at Edwards (AFB) to test further innovative developments for the F-16. Harry has been involved in the F-35 program for the Netherlands Air Force, the lead international customer for this fifth generation USA fighter airplanes. He has a special dispensation to participate as a founding Managing Partner of (SXC) while performing his military duties.

SEE ATTACHED - - "KLM-2010-11-SPACE FLIGHT."

December 2010: Senior VP Network & Alliances, Pieter Elbers said that (KLM) will continue its successful expansion into Asia with a clear focus on China. Elbers revealed (KLM) is planning to add a seventh China destination next year, while studying the possibility of opening a direct route to Vietnam “in the distant future” either on its own metal or as a code share with Vietnam Airlines (VIE). (VIE) became a full SkyTeam (STM) alliance member in June and flies into (KLM) affiliate Air France (AFA)’s hub at Paris Charles de Gaulle, but not to Amsterdam (AMS).

“Asia is rapidly moving to take a larger share in (KLM)’s overall long-haul seat production,” Elbers said, noting that 10 years ago Asia’s share in (KLM)’s longhaul seat offer was about 18%. Five years ago, it was around 25% and by next summer it will be close to 30%, he explained. Last month, (KLM) added three weekly frequencies to its daily, (AMS) - Tokyo Narita (NRT) route using a 747. Despite the recent capacity increase, (NRT) flights are already running at 80% LF load factor. “We are very encouraged by the first results,” he noted.

While adding capacity to Tokyo and growing in other places in Asia—including Indonesia, where it opened up Denpasar in December 2009 — China remains the centerpiece of (KLM)’s Asia focus. (KLM) commenced thrice-weekly service to Hangzhou Xiaoshan in mainland China in May. Elbers said, “We were the first European major to open this direct route [from Europe]. Likewise, we were the first [European airline] to start a direct route from Europe to Chengdu; we are still the only one. It is our strong belief that more destinations would eventually be able to support direct flights from Europe.” He noted that (KLM) is looking at new destinations in China as part of its strategy.

With six direct destinations to greater China, including Hong Kong and Taipei, (KLM) has the widest portfolio of destinations in the country among all European network carriers. “No other airport in Europe, no other airline in Europe has this offer,” Elbers pointed out, adding that cooperation with current and future Chinese SkyTeam (STM) alliance members will open up even more possibilities.

(KLM)’s Asia routes are operated with 747s and 777s in (KLM)'s standard two-class configuration, with business (C) and economy (Y). All economy (Y) seats now offer seat back In-flight entertainment (IFE) following the upgrade of its 747 fleet, which was finalized last month. Comfort economy, which is not positioned as an additional or intermediate class but as a buy-on option for economy (Y) passengers, is very popular on Asia routes, according to Elbers. Comfort economy seats offer a 35-inch seat pitch.

Air France Industries (AFI)/(KLM) (E&M) signed a strategic partnership agreement with Max Aerospace, aimed at developing a global Maintenance Reapir & Overhaul (MRO) network. The two parties plan to open a jointly developed Indian facility.

737-8K2 (37820, PH-BCA "Flamingo"), CIT Group (TCI) leased.

January 2011: SEE ATTACHED "KLM-2011-01-2010 WORLD TOP TRAFFIC."

Air France (AFA) will launch four-times weekly A320, Paris Charles de Gaulle - Tripoli service March 29, becoming five-times-weekly on June 6. (KLM) already operates Tripoli service from Amsterdam, giving the combined airline 11 weekly frequencies for customers to choose.

By some measures, China’s economy is now the world’s second largest. And if it continues to grow by +10% a year (admittedly a big if), it won’t be long before it surpasses the USA. Just as interestingly, growth is spreading beyond the largest cities and into secondary markets that airlines in Europe are only beginning to exploit. (KLM)’s latest market is Xiamen, located across the Straits from Taiwan. The city is already among China’s wealthiest and happens to be a popular tourism destination as well. It’s also part of Fujian province, home to a large number of people who travel overseas for work (most Chinese restaurants in the USA and Europe are owned by Fujian natives). (KLM), which also serves Hangzhou and Chengdu from Amsterdam, will start the Xiamen flights in March with 777-200ERs. Sometime later this year, Air France (AFA) will follow with Paris flights to Wuhan, a city along the Yangtze river. One reason for being so aggressive in secondary Chinese markets is Air France (AFA)/(KLM)’s close cooperation with China Southern Airlines (GUN) and, soon, China Eastern Airlines (CEA). In fact, the carriers are looking to form more joint venture (JV) routes in which revenues are shared.

777-306ER (39972, PH-BVF), delivery.

February 2011: Air France (AFA)/(KLM) flew 16.63 billion (RPK)s in January, up +4.8% from the year-ago month. Capacity rose +3.3% to 21.00 billion (ASK)s and load factor jumped +1.1 points to 79.2% LF.

The Air France (AFA) - (KLM) Group reported a -€45 million/-$61.5 million net loss for its fiscal third quarter ended December 31, narrowed from a -€294 million deficit in the year-ago period, and warned that its operating profit for its full fiscal year ending March 31 will miss previous guidance.

(AFA) - (KLM) said "numerous one-off events" throughout Fiscal Year (FY) 2010 - 2011 have dragged down earnings. The December quarter "was strongly disrupted by numerous air traffic control (ATC) strikes in France as well as heavy snowfall," it stated, adding that poor winter weather in the USA in recent weeks and "the emergence of security issues in a number of (AFA) - (KLM) destinations," including unrest in Tunisia and Egypt, are among the issues that "will have negative repercussions on the quality of unit revenues" in the March quarter.

Further, it said, "the overcapacity situation created by the increase in offer by our competitors during the winter season" has hurt unit revenue performance in January and February. "In this context, we maintain an objective of a positive operating result for full year 2010 - 2011, but it will be below our previous target of over >€300 million," (AFA) - (KLM) cautioned.

But it emphasized that unexpected occurrences, such as the volcanic-ash crisis in Europe last April, poor weather, (ATC) strikes and "geopolitical events do not call into question the structural recovery achieved by the group in 2010; the improvement in ex-fuel cost is in line with our forecasts, our ability to adapt the network to geopolitical constraints remains, and current forward bookings from mid-March and subsequent months are of good quality."

Fiscal third-quarter revenue lifted +13.9% to €5.92 billion, while expenses grew +14.4% to €3.56 billion, including a +28.2% jump in airplane fuel costs to €1.35 billion. Operating income was reported at +€81 million, reversed from a -€245 million operating loss in the year-prior period. Traffic for the quarter heightened +3.1% to 50.75 billion (RPK)s on a +1.6% lift in capacity to 62.38 billion (ASK)s, producing a load factor of 81.4% LF, up +1.2 points. Passenger yield improved +9.4% to €0.085 as (PRASK) rose +11% to €0.069 and (CASK) increased +5.5% to €0.068.

Revenue generated by (AFA) - (KLM)'s cargo business leaped +27.7% year-over-year in the quarter to €830 million. Cargo traffic increased +4.9% to 2.99 billion (RTK)s on a +3.8% boost in capacity to 4.24 billion (ATK)s, producing a load factor of 70.4% LF, up +0.7 point. Cargo yield improved +20.7% to €0.264.

For the nine months ended December 31, net income totaled +€979 million, improved from an -€867 million euro loss in the year-ago period. Operating revenue was €18.29 billion, up +14.5%.

Paris provides Air France (AFA)/(KLM) with a wealthy catchment area of about 25 million people, huge volumes of inbound tourists and large amounts of business, government, migrant, and even outbound energy-sector traffic — - "Total," one of the world’s largest oil companies, is based in Paris. True, having airport operations split between Paris Charles de Gaulle and Orly isn’t ideal, but no other large airports lie within a 300 km radius. And true, the French economy hasn’t been a growth dynamo in recent years, but it’s still the world’s fifth largest, with strong international trade links. France, unlike Germany, is also a highly centralized country, with Paris accounting for a large portion of the country’s population, commerce and government.

All of this enabled (AFA)/(KLM) to create what’s already one of the world’s most comprehensive global airline networks, with Paris and
Amsterdam at the center. And it also provides an ample platform upon which to execute management’s grand strategy of alliance formation,
becoming essentially one airline with Delta (DAL) and Alitalia (ALI) across the Atlantic, while pursuing other joint ventures (JV)s in China and elsewhere. It’s more modestly linking with other fellow SkyTeam (STM) alliance members, creating more growth opportunities still. This summer, Air France (AFA) will launch flights to Orlando and Lima from Paris, with Wuhan in China to follow. And it’s rolling out A380s to Montreal and Washington.

(KLM) is expanding in the crown’s old Caribbean colonial realm. It will add +2,600 additional seats per week this winter to destinations like Curacao, Bonaire, St Maarten, and Aruba, all part of the Dutch Caribbean. It’s separately starting non-stop flights to Ecuador (Quito and Guayaquil—one flight with through service) rather than stopping in Bonaire, as it does now.

(KLM) will resume scheduled services between Amsterdam and Buenos Aires Ezeiza on October 31, operating thrice-weekly with a 777-200ER.

Air France Industries (AFI)/(KLM) Engineering & Maintenance (E&M) signed an agreement with Air New Zealand (ANZ) expanding its 777 Component Services Program (CSP) to cover support for common parts for (ANZ)’s 777-300ERs. The (CSP) previously covered only its 777-200ER fleet. The 777 (CSP) program is offered jointly by Boeing (TBC) and (AFI)/(KLM) (E&M).

(AFI)/(KLM) (E&M) signed a five-year (APU) overhaul and repair contract with Gazpromavia Aviation covering its three 737NGs. The work will be carried out by subsidiary EPCOR BV.

(KLM) took delivery of its fifth new 777-300ER, configured with two classes and a total of 425 seats. (KLM) has a further two of the type on order, which will join its fleet next year.

March 2011: (KLM) launched four-times-weekly, Amsterdam - Miami service.

Air France Industries (AFI)/(KLM) (E&M) won a long-term contract with Philippine Airlines (PAL) covering maintenance and engineering support of its (GE90) engines. The contract also covers on-site and on-wing maintenance, shop visits, component support, spare engines and Engineering support for (PAL)’s 777ERs.

April 2011: Air France Industries (AFI)/(KLM) (E&M) was selected by Air Europa (ARE) to modify the full-economy class (Y) of one recently acquired A330 to a dual-class cabin.

Two former Air France (AFA)-(KLM) cargo executives were indicted by a federal grand jury in Chicago on charges of conspiring to fix rates and surcharges to and from the USA on airfreight shipments, the USA Department of Justice (DOJ) said.

The indictment charges former Executive VP Cargo, Marc Boudier and former VP Cargo Sales & Marketing, Jean Charles Foucault, with “conspiring with other air cargo carriers and their officials to suppress and restrain competition for international air cargo services,” according to the (DOJ). The charges, which are in violation of the Sherman Act, carry a maximum penalty of 10 years in prison and a $1 million fine, said the (DOJ), which noted Boudier and Foucault participated in the conspiracy “from at least as early as August 2004 until at least February 2006.”

To date, a total of 21 airlines and 21 executives have been charged in the (DOJ)’s ongoing investigation into price fixing in the air transportation industry.

May 2011: The Air France (AFA)/(KLM) Group reported a profit for the fiscal year ended March 31 of +€613 million/+$873.5 million, reversed from a -€1.6 billion deficit in its 2009 - 2010 fiscal year, citing a “more favorable economic environment” and cost-cutting controls for the turnaround. Annual results benefitted from a +€1.04 billion gain on its Amadeus shares, partly offset by a €127 million provision related to investigations into cargo price-fixing. (AFA)/(KLM) said that restated for non-recurring items, (AFA)/(KLM) had an annual loss of -€234 million versus a loss of -€1.23 billion on a similar basis in the 2009 to 2010 fiscal year.

Full-year revenue was €23.61 billion, up +12.5%, while operating costs rose +5.4% to €23.49 billion. Its operating result was +€122 million, reversing a -€1.29 billion loss in the prior year. “We have seen a contrasted year, with on the one hand a more favorable economic environment, but on the other a number of exceptional events affecting our operations,” said CEO, Pierre-Henri Gourgeon. “Nevertheless, the strategic actions launched last year enabled us to return to profit in spite of a €1 billion rise in our fuel bill and the impact of the various crises.” Gourgeon said the "improvement of some €1.4 billion in our operating result required a significant mobilization by all the group’s employees.”

For its fiscal fourth-quarter ended March 31, (AFA)/(KLM) reported a -€367 million net loss, narrowed from a -€691 million deficit in the year-ago period. (AFA) said the quarter was affected by the earthquake in Japan, as well as the deepening political crises in the Middle East and Africa.

Fourth-quarter revenue lifted +6% to €5.33 billion, while operating loss was trimmed to -€403 million, from a -€497 million loss in the year-ago quarter. Total cargo business revenues rose +14.1% to €769 million and operating loss was reduced to -€9 million from -€63 million. For the full year, cargo revenues jumped +29.5% to €3.16 billion and the unit posted an operating profit of +€69 million, reversing an operating loss of -€436 million the year before.

Looking forward, Gourgeon said, “Despite the economic recovery, a number of uncertainties prevail, notably the longer term impact of the earthquake in Japan and the crises in the Middle East and Africa on the economies of those regions, where we have an important presence, as well as the fuel price.” However, he said (AFA)/(KLM) is “confident in our ability to improve our operating result in 2011, and we main focused on our longer term objectives, notably a dividend in respect of financial year 2010 - 2011.”

(AFA)/(KLM) also announced that the board of directors will propose changing its accounting year to a calendar year at the July annual general meeting "in line with the majority of airline companies." If the measure is approved, the 2011 fiscal year will be of only nine months duration (April 1 - December 31).

SkyTeam (STM) Alliance members: Delta Air Lines (DAL), Air France (AFA)/(KLM) and Alitalia (ALI) announced they will reduce transatlantic capacity between Europe and the USA plus Canada offered through their joint venture by -7% to -9% this fall in response to significantly higher fuel prices "and fluctuating seasonal demand."

June 2011: (KLM) Royal Dutch Airlines presented its Delft Blue airplane at Schiphol airport. Together with the Mayor of Delft, (KLM) Managing Director, Erik Varwijk opened the hangar doors, revealing this unique airplane. The 64-metre-long, 18-metre-high airplane boasts a coat of 4,000 stickers, each in the form of a Delft Blue tile - - SEE ATTACHED PHOTO - - "KLM-2011-06-DELFT BLUE 777."

The initiative began with the worldwide "Tile & Inspire" campaign that ran between April and May. Everyone was invited to participate online, mainly via Facebook, to create a Delft Blue tile with an inspiring message in a bid to secure a place for it on a (KLM) airplane. Around 4,000 winners were selected at random from the most inspiring entries. These tiles can now be seen on 777-200 (32721, PH-BQP “Pond du Gard”), which made its first flight.

“With this Delft Blue airplane, (KLM) is establishing a link between its history and the social media. The successful online Tile & Inspire campaign has enabled us to actively involve our passengers in relation to an age-old Dutch product: Delft Blue. Delft Blue is of course inextricably linked to both Dutch culture and (KLM). Since the 1950s, (KLM) has been presenting miniature Delftware houses to its World Business Class passengers travelling on intercontinental flights. We are extremely proud that one of our airplanes now boasts a complete Delft Blue exterior,” said Erik Varwijk.

As many as 120,000 tiles were created in 154 countries; some 77,000 were submitted for a place on the airplane. The campaign generated more than >50,000 extra likes on KLM’s Facebook page and more than >450,000 views on YouTube.

(KLM)’s recent worldwide online Tile & Inspire campaign has been a great success. (KLM) challenged its Facebook fans and passengers to convert their profile pictures into a Delft Blue tile with an inspiring message, in the hope of winning a place on the body of a (KLM) 777-200. Inspiring messages were considered in Chinese, German, English, French, Dutch, Norwegian, Portuguese, Russian, Spanish, and Swedish. In the end, an entire series of tiles in these languages were selected for the airplane. These inspiring messages will soon be flying to multiple destinations.

(KLM) will launch twice-weekly, Amsterdam - Rio de Janeiro Galeão 777-200ER service on November 1. (KLM) will next winter temporarily cease its four-times-weekly service to Dallas/Fort Worth, as part of recently announced capacity reductions.

(IATA) (ITA) said (KLM) President & CEO, Peter Hartman will succeed FedEx Express (FED) CEO, David Bronczek as Chairman of the Board of Governors, effective immediately. His term will expire at the conclusion of next year’s (IATA) (AGM) in Beijing. (IATA) also announced that Qantas (QAN) CEO, Alan Joyce will serve as Chairman from June 2012, following Hartman’s term.

(KLM) said that scheduled Amsterdam (AMS) - Paris Charles de Gaulle (CDG) - (AMS) flights using a 737-800 partially powered by biofuel, operated "exactly the same—as expected—as flights on traditional kerosene."

Both of the 737-800's (CFM56) engines were powered by a 50-50 blend of traditional kerosene and biofuel derived from used cooking oil. The flights, the world's first commercial service operated using biofuel, came after a number of biofuel test flights conducted by carriers around the world and ahead of (KLM)'s plan to operate some 200 (AMS) - (CDG) commercial flights powered in part by biokerosene starting in September.

The Dutch Inspectorate for Transport, Public Works & Water Management granted (KLM) permission to operate these flights, which both had an almost full load of 171 passengers.

The biofuel used for the flights was supplied by Dynamic Fuels and distributed to the carrier via SkyNRG, the consortium co-founded by (KLM) in 2009 with the North Sea Group and Spring Associates.

In November 2009, (KLM) operated a demonstration flight over the Netherlands using a 747 with one if its four engines running on a 50/50 blend of Jet A1 and biojet A refined from the camelina plant.

September 2011: (KLM) will launch 2X-weekly, Amsterdam - Luanda 777-200ER service on November 14.

The (AFA) - (KLM) Group stated it plans to order 25 787-9s and 25 A350-900s. List-price value of the Boeing (TBC) order is $5.5 billion which Avitas assumes discounts will bring it to around $3.2 billion. List-price of the Airbus (EDS) order is $6.7 billion with the Avitas estimate as $3.2 billion.

Delivery of the wide-body airplanes will begin in 2016. There are also options for 60 airplanes; with expectations to take at least 23 of these by 2024.

October 2011: Pierre-Henri Gourgeon stepped down as CEO of the AirFrance (AFA)/(KLM) Group and CEO of Air France (AF) following a board meeting in Paris.

Former (AFA) Chairman & CEO, Jean Cyril Spinetta and former (KLM) President & CEO, Leo Van Wijk were reappointed as Chairman and CEO of the (AFA)/(KLM) Group and group Deputy CEO, respectively. They will be in charge of its “strategic coordination,” (AFA) said. The two men masterminded Europe’s first merger between the two flag carriers in 2004.

Alexandre de Juniac, who previously was chief of staff to the former French Finance Minister, Christine Lagarde until her recent appointment to run the International Monetary Fund, replaces Gourgeon as (AFA) Chairman & CEO.

The management reshuffle reflects board and analyst concerns over the poor financial performance of the group (particularly (AFA)) since Gourgeon took over from Spinetta in January 2009 as Group & (AFA) CEO. Spinetta, who turned 70 earlier this month, remained active as Chairman of (AFA)/(KLM).

Concern about pilot (FC) training procedures following the fatal (AFA) A330 flight 447 crash over the Atlantic in June 2009 was also a factor, according to insiders. In a statement titled “Governance,” (AFA)/(KLM) said its board had “determined the orientations in relation to the organization and governance of AirFrance (AFA) and of the AirFrance KLM Group, as well as to the appointment of its senior executives. The aim is to improve the group's operating and financial performance in a context of economic uncertainties affecting the European air traffic, as well as the position of AirFrance in respect of increased competition from new entrants.”

Gourgeon was slated to stay in the role until January 2013 after his mandate was renewed for a second term this summer. In past months, French media reported that he would be replaced in January as (AFA) CEO and in 2013 as Group CEO. But his position weakened after a declining profit outlook.

De Juniac was an executive with Thales (THL) for more than a decade before joining Lagarde’s staff. (AFA)/(KLM) also said that it was deferring the set up of a full-dedicated (AFA)/(KLM) holding, from early 2012 to 2013 because “top priority” must be given to the recovery and improvement of the performances of (AFA) and (KLM).

AirFrance (AFA) launched its much-discussed provincial base strategy, a plan to defend against Low Cost Carriers (LCC)s like easyJet (EZY) and Vueling (VUZ). Thirteen new routes from Marseilles are now under way, with (LCC)-free cities like Moscow, Beirut and Istanbul among the destinations. The service level for these flights is the normal (AFA) shorthaul standard (free advance seat assignments, for example) but fares are lower thanks to new approaches to lowering unit costs, including greater airplane and crew productivity. The base concept will spread to Nice, Toulouse and Bordeaux next year, and to Paris Orly and Lyon after that, if it proves successful.

The new base project means AirFrance (AFA)/(KLM)’s intra-European (ASK) capacity will be up +6% (y/y) this winter. Its longhaul network, meanwhile, will be up just +3% after several recent revisions. On the (AFA) side, total winter (ASK)s are to grow +5%, in part driven by larger airplanes like A380s (which are being retrofitted with premium economy (PY) sections) and seat densification on some 777s. A new route from Paris to Cancun starts later this month as previously announced, part of a bullish +17% expansion to Latin America (Caracas and Santiago, for example, will see additional frequencies). In Africa, capacity (ASK)s will be up +6%, led by new Paris nonstops to Cape Town, a market that peaks in the winter. And Middle Eastern capacity will be down -7% due to pullbacks in Cairo, Beirut, Amman, and Damascus. On the (KLM) side, longhaul growth is more aggressive with a return to Buenos Aires and Rio de Janeiro from Amsterdam and new nonstops to Havana, Punta Cana and Luanda. (KLM)'s also expanding in Switzerland and Germany closer to home but suspending flights to Dallas (DFW) for the winter. (KLM) believes it can support its new longhaul flights thanks to Amsterdam schedule adjustments that should optimize connecting opportunities.

(AFA)-KLM says that its provisional fleet plan will see the group operating 73 new wide bodies through to 2024, including 43 A350-900s and 30 787-9s. The first 787-9 is due to enter into service with (KLM) in 2016 and the first A350-900 with (AFA) in 2018. Both airlines will eventually operate both types.

Quantum Control was selected by AirFrance Industries (AFI)/(KLM) Engineering and Maintenance to further support its Total Component Care program. (AFI) subsidiary, (EPCOR) has been managing its airplane services business using Quantum Control for over six years.

Amadeus was selected by (KLM) to implement Amadeus Ancillary Services (AAS) in The Netherlands. (KLM) can now offer travel agencies the option to book economy (Y) comfort seats through (AAS).

2 737-7K2s (38128, PH-BGW "ZANGLIJSTER/SONG THRUSH;" 38635, PH-BGX "SCHOLEKSTER/OYSTERCATCHER"), Cit Group (TCI) leased.

November 2011: The Air France (AFA)/(KLM) Group reported a net profit of +€14 million/+$19.2 million for the quarter ended September 30, down -95.2% from net income of +€290 million in the year-ago quarter, due mainly to foreign exchange losses and a decline in the fair value of hedging instruments.

Chairman & CEO, Jean-Cyril Spinetta said the group’s “insufficient profitability in recent quarters, in an economic environment affected by the weak global demand and high oil prices, shows that we need to go further” despite the “many measures” pursued over the last three years.

(AFA)/(KLM) last month announced a shakeup of its top management, which included the return of Spinetta as group CEO and (AFA) CEO. Spinetta said the new management will focus on three priorities: a “rapid” reduction of the company’s -€6.5 billion net debt, additional cost savings, and the restructuring of its short- and medium-haul business. He declined to go into detail and said an action plan will be presented during the first quarter of 2012.

Operating revenue climbed +2.1% to €6.79 billion in the quarter, while expenses heightened +5.3% to €6.39 billion owing mainly to soaring fuel costs. Excluding fuel, total operating costs rose +2.3% for a +4.9% increase in (EASK)s (equivalent (ASK)s, which weighs in both passenger and cargo operations). Operating income fell -31.1% to €397 million.

The group’s passenger business delivered a positive operating result of +€356 million for the quarter on a +2.9% increase in revenue to €5.2 billion. Passenger traffic rose +7.9% on a +6.2% hike in capacity, producing a load factor of 86.1% LF, up +1.3 point on the year-ago quarter. The cargo business posted an operating loss of -€37 million.

Aerolíneas Argentinas (ARG) signed code share agreements with AirFrance (AFA) and (KLM), under which (AFA) and (KLM) will place their codes on (ARG) service to Cordoba, Mendoza, Rosario, Montevideo, and Asuncion. (ARG) will place its code on (AFA) and (KLM) service to Nice, Marseille, Toulouse, Lyon, and Bordeaux and other European destinations, including Berlin and Munich.

Air France (AFA) will commence 3X-weekly scheduled service between Paris-Charles de Gaulle and Wuhan Tianhe on April 11, 2012. (AFA) will use a 777-200ER configured with 309 seats, comprising 35C in business, 24PY in premium economy and 250Y in economy.

(AFA) is the first airline to offer direct flights between Europe and Wuhan. The new route further strengthens the (AFA)/(KLM) Group’s position as the leading airline group between Europe and China. In the winter schedule, (AFA)/(KLM) is operating 80 flights a week to eight destinations in Greater China (Beijing, Shanghai, Guangzhou, Hong Kong, Chengdu, Hangzhou, Xiamen), and Taipei.

It also operates 31 flights weekly under code share agreements with its China Eastern (CEA) and China Southern (GUN) partners.

For the six months ended Sept. 30, AF KLM Group posted a net loss of €183 million, reversed from a €1.03 billion net profit in the year-ago period when earnings benefitted from a €1.03 billion gain from the sale of part of its holding in Amadeus. Operating profit amounted to €252 million.

AF KLM Group—which is changing its fiscal year to the calendar year from a year that ended on March 31—warned it expects to report an operating loss in the year's last quarter, owing to the difficult economic environment exacerbated by volatile currency movements and a high fuel price. It also anticipates reporting an operating loss for the 12 months through Dec. 31. However, for its fiscal year, which comprises the nine months from April to December, it anticipates a positive operating result.

Emirates (EAD) and AirFrance Industries (AFI)/(KLM) E&M have signed a five-year nonexclusive agreement for component services, and a general terms agreement, on its 777 and A330/A340 fleets.

Royal Jordanian (RJA) has selected AirFrance Industries (AFI)/(KLM) Engineering & Maintenance to provide component support for its three A330 passenger jets. The contract includes repairs and access to the spares pool as part of a per-flight-hour contract.

December 2011: (KLM) was the first European airline to serve New York in 1946.

(KLM) will launch 3X-weekly, Amsterdam - Lusaka A330-200 service on May 15.

January 2012: The AirFrance (AFA)/(KLM) Group revealed its three-year “transformation plan” to bring the company back to profitability by cutting costs immediately by -€1 billion/-$1.27 billion and rapidly reducing debt by -€2 billion to €4.5 billion by the end of 2014.

The group said it will increase capacity by a little over +5% on a cumulative basis.

At (AFA), the plan includes freezing pay raises in 2012 and 2013. At (KLM), plans include moderating wages, freezing new hires, implementing additional productivity measures, reducing overhead costs and making changes to the network. Negotiations with social partners are on-going.

The plan, which was initially outlined in November, builds on three priorities: restoring competitiveness through cost-cutting; restructuring the short- and medium-haul operations; and rapidly reducing debt.

The company disclosed that in 2011 its short- and medium-haul network losses were around -€700 million. “The long-haul operations, also subject to increasing competition, cannot alone offset these losses,” (AFA)/(KLM) said.

The company wants to restore its medium-haul business to breakeven by 2014 through a better utilization rate of airplanes and assets. It also wants to “significantly” improve productivity in all employee categories and extensively outsource some activities. It did not provide more detailed information but stressed its short- and medium-haul network remains “indispensable” to the group’s development.

The quasi-stable capacity growth between 2012 and 2014, affecting both passenger and cargo operations, will lead to a reduction of its fleet and, consequently, its investment program, from more than €6 billion between 2009 - 2011 to below €5 billion over the next three years. Airplane deliveries will be deferred and options will not be exercised without detailing which orders will be affected, it said. The investment reduction will not affect ongoing operational safety and customer service programs.

The statement did not mention layoff plans, although it is widely expected that job cuts, mainly at (AFA), will be announced after the upcoming French presidential elections.

For the six months ended September 30, 2011, the group posted a net loss of -€183 million, reversed from a +€1.03 billion net profit in the year-ago period when earnings benefitted from a +€1.03 billion gain from the sale of part of its holding in Amadeus.

Air France Industries (AFI)/(KLM) Engineering & Maintenance (E&M) has resumed its cooperation with Afriqiyah Airways (AQY) following a hiatus of over a year. The agreement involves pool access and component repairs for (AQY)'s A320 and A330 fleets and includes the maintenance checks on the airplanes.

(KLM) has retired its remaining 737-300s and 737-400s by October and is introducing two new long-haul services:
Amsterdam - Luanda: 2x weekly A330-200 service starting on March 27;
Amsterdam - Lusaka: 3x weekly A330-200 service starting on May 15;

(KLM) is also revising its operations to several destinations in the Arabian Gulf:
Amsterdam - Abu Dhabi International - Bahrain - Amsterdam: 2x weekly A330-200 service starting on March 26 (Abu Dhabi is currently served non-stop and Bahrain in combination with Kuwait);
Amsterdam - Bahrain - Abu Dhabi International - Amsterdam: 3x weekly A330-200 service starting on March 27;
Amsterdam - Dammam - Kuwait - Amsterdam: 3x weekly A330-200 service starting on March 26 (Dammam is currently served non-stop and Kuwait in combination with Bahrain);
Amsterdam - Doha: 5x weekly A330-200 service starting on March 25 (Doha is currently served with a stop in Dammam in both directions);
Amsterdam - Kuwait - Dammam - Amsterdam: 4x weekly A330-200 service starting on March 27;
Amsterdam - Tripoli International: 3x weekly 737-700 service resuming on March 27.

In combination with long-haul flights, (KLM) is now also code sharing on and selling Transavia Airlines (TAV) flights from Amsterdam to Alicante, Malaga, Naples, Pisa, and Valencia. (KLM) will, however, give up its routes from Amsterdam to Liverpool, Miami, and Milan Malpensa (in favor of more services to Linate) by the end of March.

(KLM) has entered into code share agreements with Aeroflot (ARO) for the Amsterdam - Moscow Sheremetyevo route - both Skyteam (STM) Alliance carriers serve this twice daily. (KLM) has also implemented similar agreements with China Eastern Airlines (CEA) and Westjet (WJI) to offer its passengers better connections to Canadian and Chinese cities it does not serve directly.

The European Commission (EC) has opened an investigation to assess whether the transatlantic joint venture (JV) between (AFA) - (KLM)), Alitalia (ALI) and Delta Air Lines (DAL) breaches (EU) antitrust rules. “The (EC) will investigate whether the partnership may harm passengers on certain (EU) - USA routes where, in the absence of the joint venture (JV), the parties would be providing competing services.” Under terms of the (JV), concluded in 2009 and 2010, the SkyTeam (STM) Alliance carriers fully coordinate their transatlantic operations with respect to capacity, schedules, pricing and revenue management. They also share profits and losses on their transatlantic flights.

The (EC) noted the investigation is “coherent with the (EC)'s recent enforcement action in relation to the transatlantic (JV)s of the two other airline alliances,” Oneworld (ONW) and Star (SAL) Alliances.

The (EC) formally opened antitrust proceedings into the planned transatlantic (JV) between British Airways (BAB), American Airlines (AAL) and Iberia (IBE) in April 2009. It cleared the (JV) of the three Oneworld (ONW) Alliance airlines in July 2010 after they accepted a series of legally binding commitments to address the (EC)’s competition concerns. The antitrust probe into the transatlantic cooperation between Star (SAL) Alliance members Air Canada (ACN), Lufthansa (DLH), Continental Airlines (CAL) and United Airlines (UAL) was opened in April 2009 and is still ongoing, the (EC) confirmed.

Meanwhile, the (EC) has closed its investigation into cooperation agreements between eight SkyTeam (STM) Alliance members that began in 2006 when the member airlines were Aeromexico (AMX), (AFA), (KLM), (ALI), (CAL), (CSA) Czech Airlines, (DAL), and Korean Air Lines (KAL). (CAL) has since merged with (UAL) and left SkyTeam(STM) Alliance for the Star (SAL) Alliance. “This decision was taken as part of the priority-setting process in light of significant changes in the circumstances on the relevant markets. The closure of proceedings does not, however, relieve the SkyTeam (STM) Alliance members from assessing their behavior and ensuring that they comply with (EU) competition law,” the (EC) said.

AirFrance (AFI)/(KLM) (E&M) has signed a contract with Libyan Airlines (LAA) covering component support (pool access and repairs) and maintenance checks for (LAA)’s A320 and ATR42-500 fleets.

(AFI)/(KLM) (E&M) has completed maintenance checks, repainting and modifications on two 737-800s under a contract from Air Lease Corporation (ALE). The airplanes have been delivered to new lessees, Caribbean Airlines (TTA) and Transaero Airlines (TRX).

(AMECO) Beijing (BEJ) announced that its (AMECO) Chongqing station and Guangzhou station will provide comprehensive line maintenance service for (KLM) Royal Dutch Airlines 747F cargo airplanes.

Amsterdam-based SkyNRG finished 2011 on a high note by partnering with Thai Airways (TII) to conduct what was called “the first passenger biofuels flight in Asia” in late December (Air China (BEJ) flew a biofuel demonstration flight in October without paying passengers). The (TII) flight from Bangkok to Chiang Mai included a 777 with both engines running on a 50-50 fuel mix of bio-jet fuel derived from used cooking oil and conventional petroleum-based jet fuel. As we’ve seen before with these “first” flights, (TII) airline officials said the flight marked the beginning of a collaborative effort to develop a bio-jet fuel supply chain in Thailand. For SkyNRG, which sourced the fuel, this flight followed similar flights
by AirFrance (AFA), Alaska (ASA), Finnair (FIN), (KLM) and Thomson Airways (ATZ)/(TFY), all since July, when bio-jet fuel became standardized.

In their search for commercially viable bio-jet fuel, airlines are leaving no stone unturned in Australia. Lufthansa has signed an agreement with the Perth-based biofuel company Algae.Tec. The plan is to “jointly evaluate the potential” of Algae.Tec’s algae-based crude oil as a low-carbon jet fuel source. Meanwhile, Air New Zealand (ANZ) and Virgin Australia (VOZ) signed similar agreements with the Sydney-based biofuel company Licella, which has technology to convert a range of waste plant material, such as sawdust, corn stalks and sugar cane waste, into bio-jet fuel.

(KLM) Engineering & Maintenance promoted Senior VP Operations, Ton Dortmans to Executive VP succeeding Peter de Swert.

The AirFrance (AFA)/(KLM) Group has finalized an order for 25 787-9s, with options. The order was signed in late December. A preliminary agreement was first announced on September 16.

February 2012: AirFrance (AFA)-(KLM) Cargo and Martinair Cargo (MTH) plan to begin 2X-weekly, Paris - Atlanta 747F air cargo service on March 27; AirFrance (AFA) Cargo will operate the flights while AirFrance (AFA)-(KLM) Cargo and Martinair (MTH) Cargo will provide sales and customer service.

AirFrance (AFA) has relaunched plans for a partnership in a new airline in the Ivory Coast, which would make it a regional hub. The carrier, Air Côte d'Ivoire, could begin operations at the end of April with two leased A319s, "La Tribune" reported, citing (AFA) (CEO), Alexandre de Juniac, who was in the West African country to discuss the venture.

The Ivory Coast government would hold a 51% stake and the (AFA)/(KLM) Group would hold a 35% stake with partner Aga Khan Fund for Economic Development of the Ivory Coast. Local investors would hold the remaining 14% stake.

For (AFA)/(KLM), the move is part of a strategy to maintain its strong position in Africa and fend off increasing competition from Star Alliance (SAL) carriers Turkish Airlines (THY), Brussels Airlines (DAT)/(EBA) and Emirates Airline (EAD).

(AFA)’s goal is to build Abidjan Port Bouet Airport (ABJ) as a regional hub and secure a regional feed in West Africa. “Abidjan has a very privileged location in the area,” de Juniac said. (AFA)’s plan is to build a strategic partnership in the region. He said the venture has what he called a defensive component and said it would be “risky not to take part.”

Last summer, Ivory Coast’s Transport Minister, Gaoussou Toure told "Bloomberg" the government planned to start a new airline to replace Air Ivoire with the (AFA)/(KLM) Group holding a minority stake.

(AFA) operates a daily, Paris Charles de Gaulle - (ABJ) service.

AirFrance Industries (AFI)/(KLM) (E&M) signed an eight-year (APU) support contract with (LAN) Airlines covering its fleet of 777Fs. The services will be provided by (EPCOR), while pool access will be provided by (AFI)/(KLM) (E&M).

AirFrance Industries (AFI)/(KLM) (E&M) signed an eight-year (APU) support contract with (LAN) Airlines covering its fleet of 777Fs. The services will be provided by (EPCOR), while pool access will be provided by (AFI)/(KLM) (E&M).

Kenya Airways (KEN) and (KLM) have jointly launched a 2X-weekly, 747-400F Amsterdam (AMS) - Guangzhou (CAN) - Sharjah - Nairobi (NBO) - Lagos - (NBO) - (AMS) freighter service.

The new service, which marks (KEN)’s entry into the dedicated freighter segment, is an extension of an existing joint venture (JV) between (KEN) and (KLM). The airplane is owned by Martinair (MTH), a subsidiary of (KLM).

(KEN) said it plans to introduce 12 freighters into its fleet over the next 10 years, some wholly owned and others leased, which it said is “to improve the airline’s overall cargo carrying capability and reduce over-dependence on the passenger fleet whose belly capacity is limited.”

The 747-400F has a one-off livery, featuring Kenya Airways Cargo and Air France (AFA)/(KLM) Cargo to reflect the joint operation of the service and "Safari Connection," denoting its triangular network connecting Europe, China and Africa. The 747-400F bears the slogan “Hunting for Business” in Chinese Mandarin on its tail.

(KLM) expects deliveries of its 787-9s to begin on schedule in October 2015, but is in no rush to make an engine selection. (KLM) has 23 787s on order plus options for 25 more airplanes through parent company, the AirFrance (AFA)/(KLM) Group. The airplanes will make up a significant portion of (KLM)’s fleet renewal plan, which will focus on replacing its aging Fokker F-100s with Embraer EMB-190s and replacing much of its wide body fleet with a mix of A330s and A350s, as well as 777s and 787s.

KLM VP Fleet Services, Peter Slobbe said the fleet renewal would be accompanied by new business-class (C) interiors across its wide bodies, beginning next year with its 747s. (KLM) operates 22 747-400s, including 16 combis. An announcement on the new lie-flat seat supplier will be announced soon, Slobbe said.

The A330-300 delivered this month is leased from Air Lease Corporation (ALE), the first all-new airplane that (KLM) has taken from the lessor. The second A330-300 will be delivered in March and the third in April, with both airplanes leased from (GECAS) (GEF). A fourth A330-300 will be delivered in January 2013 and will be owned, although Slobbe said there remains the option to do a sale and leaseback deal. In addition, a 12th A330-200 (also to be leased from (ALE)) will be delivered in April 2013.

(KLM) is also scheduled to receive three more 777-300ERs in June and July this year and May 2013, adding to its current fleet of five 777-300ERs and 15 777-200s. Along with the 787s, they will help replace the 747s and 10 MD-11s. “We have the flexibility at the moment to be able to speed up or slow down the phasing out of the MD-11s and 747s,” Slobbe said.

A choice between (GE) or Rolls-Royce (RRC) engines has yet to be made on the 787s, but Slobbe said (KLM) will likely wait to see how each engine does in service with earlier 787 operators. All Nippon Airways (ANA) is the only current 787 operator and its airplanes are powered by Rolls (Trent 1000) engines.

Final negotiations are continuing over a Group purchase of A350s, Slobbe said, but the intent is for AirFrance (AFA) to take the lead on those deliveries.

Meanwhile, the last five F-100s will be phased out by the end of this year and five more EMB-190s will be delivered between March and May, bringing (KLM)’s Embraer fleet to 21 airplanes.

(KLM) also operates 25 Fokker F-70s and 46 737 NextGen narrow bodies. Slobbe said there are no near-term plans to replace those fleets.

A330-303 (1287, PH-AKA), (ALE) leased.

March 2012: The AirFrance (AFA)/(KLM) Group reported a net loss for its shortened nine-month 2011 financial year of -€442 million/-$580.5 million, reversed from a net profit +€980 million in the year ago-period. The operating result was positive, but the reported +€50 million operating profit was sharply down from the +€525 million operating profit in the year-ago period.

On a pro forma basis for the full year, January 1 through December 2011, results were worse with net loss coming in at €809 million versus a pro forma €289 million profit in 2010.

Group Chairman, Jean-Cyril Spinetta described 2011 as “a tough year for the group, due to the uncertain operating environment and the high fuel price.” He stressed that in “in this context, the success of the transformation plan presented on January 11 this year, is all the more crucial. All the announced actions are already underway.”

The group’s three-year (2012 - 2014) "Transform 2015" plan aims to bring the company back to profitability and builds on three priorities: restoring competitiveness through cost-cutting; restructuring the short- and medium-haul operations; and rapidly reducing debt by €2 billion to €4.5 billion by the end of 2014. The plan was initially outlined in November.

The restructuring plan targets a -10% reduction in unit cost ex-fuel and a return to breakeven of its loss-making medium-haul operations by 2014. The group’s medium-haul network reported a -€700 million operating loss in 2011.

Full-year pro forma revenue rose +4.5% to €24.36 billion and operating expenses rose +6.2% to €24.72 billion, mainly due to a +16.3% hike in fuel costs to €6.44 billion. Operating loss for the full year was -€353 million compared to a profit of +€28 million in 2010, including a -€202 million operating loss incurred in the fourth quarter. This compares to a +€81 million operating profit in the last three months of 2010.

The group gave a rather bleak outlook for the current year and said it expects first-half operating results “will be below that of the previous year [-€548 million loss]. However, the second half should benefit from the first effects of the three-year [restructuring] plan,” it said.

The AirFrance (AFA)/(KLM) Group (AF-KLM) has sold about half of its 15.22% its shareholding in Amadeus (IT) Holding, netting it €467 million/$627.5 million.

The sale of 7.5% of its ownership in the travel technology and distribution company is surely part of its efforts to restore profitability. The Franco-Dutch group in January launched a three-year “transformation plan” to bring the company back to profitability by immediately cutting costs by -€1 billion and rapidly reducing debt by -€2 billion to €4.5 billion by the end of 2014.

On March 8, (AFA)/(KLM) will announce financial results for its shortened nine-month financial year 2011. An analyst consensus forecast an operating loss of around -€240 million and a net loss of up to -€650 million. The (IAG) announced a +€555 million net profit for 2011.

(AFA)/(KLM) sold the 7.5% stake in Amadeus though a private placement. Rothschild has acted as adviser of the Group. The placement was managed by Goldman Sachs International and Santander.

(AFA) still retains 7.72 % of Amadeus (IT) Holding and said this brings its shareholding in line with Iberia (IBE)’s and Lufthansa (DLH). The three carriers, together with (SAS) Scandinavian Airlines, founded Amadeus as a global distribution system (GDS) in 1987.

“AirFrance (AFA), as well as (IBE) and (DLH), which hold respectively 7.50% and 7.61% of the share capital of Amadeus (IT) Holding, have each agreed to a lock-up of a 90-day period,” the (AFA)/(KLM) Group said.

AirFrance (AFA)/(KLM) is aiming to buy Alitalia (ALI in 2013 through a share swap, "La Tribune" reported.

However, using shares instead of cash to finance the acquisition will require a rebound of its share price, which is trading at around €4/$5.27, and a swift execution of its three-year “transformation plan” to bring the company back to profitability.

(AFA)/(KLM) will announce full-year results and analysts expect the group to report a net loss. Group debt is around €6.5 billion.

The Franco-Dutch group bought a 25% shareholding in (ALI) in early 2009, following the restructuring and re-launch of (ALI) under private ownership. (AFA)/(KLM) also obtained an option, subject to certain conditions, to purchase additional shares from 2013.

Acquiring full control of (ALI) is one of the main concerns of group Chairman, Jean-Cyril Spinetta, according to the French newspaper. Spinetta is also a board member of the Italian carrier.

(AFA) and (KLM) used an exchange offer for their merger in 2004. It wants to use the same mechanism for (ALI) to preserve its limited cash position, but “if the share price remains at its present level, the operation is impossible,” a company source told "La Tribune." It added that some analysts are warning that the Italian shareholders probably would prefer cash over shares of a loss-making airline.

Analysts also point to the possibility that the Italian shareholders might turn to Lufthansa (DLH), “which does have the means to pay in cash,” or might use the German card to heighten the price. (DLH) competed with (AFA)/(KLM) in 2008 to become the new (ALI)’s strategic partner/investor and was the preferred choice of then Italian Prime Minister, Silvio Berlusconi.

(ALI) reported a 2011 net loss of -€69 million/-$92.9 million, a +58.9% improvement from a -€168 million deficit in 2010. Operating loss was reduced from -€106 million to -€6 million “with a negative margin of 0.17% on revenues, in line with the operating breakeven objective,” the company said last month.

(KLM) and Ukraine International Airlines (UKR) are increasing capacity between Amsterdam and Kiev and expanding their code share agreement, partly in response to an anticipated rise in demand owing to the upcoming 2012 (UEFA) European Football (soccer) Championship in Ukraine.

(KLM) will add its code on (UKR) domestic flights originating in Kiev to Donetsk (DOK), Dnepropetrovsk (DNK), Lvov (LWO), Odessa (ODS) and Simferopol (SIP). (UKR) will add its code on (KLM) flights from Amsterdam to Birmingham (BHX), Edinburgh (EDI), Manchester (MAN) and London Heathrow (LHR). The expanded code share will begin March 25. The airlines also will add a fourth daily frequency on the route in June.

The extended cooperation is pending approval of all regulatory authorities, the carriers said.

The European Union’s Emissions Trading Scheme (EU ETS) will lead to a distortion of competition, higher ticket prices for Dutch consumers and be financially damaging to Amsterdam Schiphol Airport (AMS) and (KLM), a senior politician has warned.

The Netherlands’ Secretary of Infrastructure & Environment, Joop Atsma told parliament’s House of Representatives in a letter that the (EU ETS) would cost (KLM) €30 million/$39 million annually and could result in a loss of -150,000 passengers (0.6% of total passengers carried in 2011) if (KLM) passes on those costs to customers. In turn, this could lead to a revenue reduction of -€3.6 million for (AMS) and the possible loss of -200 jobs.

The warning falls in line with concerns of many European carriers about the impact of (EU ETS).

Atsma’s conclusions are based on a report by the Netherlands Institute for Transport Policy Analysis (the Kennisinstituut voor Mobiliteitsbeleid (KiM)) on the effects of the new carbon tax on the environment and on the Dutch avation industry. (KiM) is an independent institute within the Dutch Ministry of Infrastructure & Environment.

The passenger loss for (KLM) could double to -300,000 annually, if the price of carbon permits or (EU) allowances doubles to €20 per tonne and the airline passes on (EU ETS) costs to passengers, according to the (KiM) report.

Other (EU) network carriers will also see a decline in passengers, mainly in their highly price-sensitive transfer traffic, the report states. Conversely, airlines and hub airports located outside the boundaries of the (EU) will benefit from the (EU ETS). The report estimates that Emirates (EAD) could see a +0.7% to +2.7% increase in passenger numbers per year, Swiss (CSR) could benefit by +0.5% to + 1.9% and Turkish Airlines (THY) +0.1% to +0.6%. This equates to 220,000, 190,000 and 65,000 additional passengers respectively.

“The negative effects of the (EU ETS) on the international competitiveness of Dutch aviation industry will be even worse if third countries implement retaliatory measures,” Atsma said in the letter, noting that this “calls for a global solution. The Netherlands will thus actively promote a positive outcome of the negotiations within (ICAO).”

AirFrance Industries (AFI)/(KLM) (E&M) has completed maintenance work on one 737SF for Cargo Air (VEA), a new customer, and has signed a component support agreement with (VEA).

AirFrance Industries (AFI)/(KLM) (E&M) has extended a component support contract with Yemenia Airways (YEM), originally signed in 2005. The renewed contract operates under the same terms, covering component support with pool access and repairs for two A330s.

April 2012: AirFrance Industries (AFI)/(KLM) Engineering & Maintenance (E&M) has a contract with TAB Cargo (TPB) for the supply of a spare lease engine plus an engine shopvisit for its DC-10F.

(AFI)/(KLM) (E&M) won a contract from National Airlines (MUA) to provide maintenance for its (CF6-80C2) engines, powering its fleet of 747-400Fs. It will also lease airplane engines to (MUA) during repairs.

(AFI)/(KLM) (E&M) signed a contract with Air Corsica (CCM) covering phase out and "C" maintenance checks on its two A319s, to be carried out in April at (AFI)/(KLM) (E&M)'s Toulouse-Blagnac facility.

(AFI)/(KLM) (E&M) has promoted Ron de Bos Head of Sales in North America. De Bos joined (KLM) (E&M) in 1995 as a Purchasing Unit Manager, and from 2008 - 2012 served as Director Integrated Services.

May 2012: (KLM) relaunches services from Amsterdam to Zambia’s capital Lusaka after 16 years absence.

AirFrance Industries (AFI)/(KLM) (E&M) won a long-term engine support contract from Midwest Airlines (MWA), covering (CFM56-7) engines equipping its two 737NG airplanes. The agreement covers shop visits and the supply of spare engines.

(AFI)/(KLM) (E&M) has won multiple engineering projects from (ILFC) (ILF). Modification projects include work for A320 and A330 airplanes such as cabin, avionics and material management.

(AFI)/(KLM) (E&M) has signed a component support contract with Aigle Azur (AZU) covering (AZU)'s fleet of A320s. The contract is a flight-hour agreement and includes major overhauls (C-checks) on a non-exclusive basis.

A330-300 (GEF) leased delivery.

June 2012: (KLM) Royal Dutch Airlines (CEO), Peter Hartman has confirmed during the (IATA) Annual General Meeting (AGM) that AirFrance (AFA)-(KLM) is in talks with Etihad Airways (EHD) about a potential joint venture (JV) or cooperation on routes between Europe, the Middle East and Asia. He has, however, ruled out any investments by (EHD) in (AFA)-(KLM).

(KLM) has operated what it claimed was the longest commercial biofuel flight to date. Flight KL705 left Amsterdam June 19 bound for Rio de Janeiro to coincide with the Rio+20 United Nations Sustainable Development Conference, a flight of almost 6,000 miles/9,600 km.

The 777-200 was operating a normal commercial service, but partly flying using sustainable fuel made from used cooking oil. Passengers included the Netherlands State Secretary of Infrastructure & the Environment, Joop Atsma.

(KLM) has been working with the World Wide Fund for Nature - The Netherlands (WWF-NL) since 2007, and in June last year operated the first commercial biofuel flight. It was the first airline to develop a biofuel program with SkyNRG, a company founded by (KLM) in 2009 with the North Sea Group and Spring Associates that now supplies more than >15 carriers worldwide with sustainable kerosene.

(KLM) said it was open “to using different kinds of raw materials for the end product, as long as they meet a range of sustainability criteria, including a substantial reduction in CO2 emissions, and minimal negative impact on biodiversity and food supply.” It also stressed that any biofuels it used, would have to meet “the same technical specifications as traditional kerosene,” requiring no adjustments to either the airplane engines or the infrastructure.

The operation of the flight also marked the launch of (KLM)’s BioFuel Program that will enable companies to operate some of their flights using sustainable biofuel and help stimulate the further development of biofuels, (KLM) said.

Companies that have joined the program thus far include Ahold, Heineken, Accenture, (DSM), Philips, Nike and the Schiphol Group.

(KLM) Managing Director, Camiel Eurlings said, “Using sustainable BioFuel is one of the most important ways to make aviation more sustainable. We can only achieve this with partners who dare to stick their necks out.”

“The (KLM) BioFuel program enables companies to join (KLM) and SkyNRG to demonstrate the leading position they occupy on sustainability. I call upon Dutch businesses to join in to accelerate the development of biofuels and to stimulate a sustainable economy. I will do everything in my power to ensure that from 2013, Dutch officials on government business will travel as much as possible on biofuel flights, including the government’s own airplanes,” Atsma said.

(KLM)/(AUK) and Flybe (BEE) have launched a code share agreement on two routes between Amsterdam (AMS) and the UK. (KLM)/(AUK) will now operate three flights a day between (AMS) and Southampton, as well as a daily flight between (AMS) and Inverness.

Flights on which (KLM) will put its code will be operated by (BEE) with Bombardier DHC-8-Q400 and Embraer EMB-195 airplanes.

This partnership enhances the existing cooperation between (AFA)/(KLM) and (BEE) on a number of routes between France and the UK.

(AFA) and (KLM) will partner with Panasonic Avionics to offer in-flight Wi-Fi and mobile phone data services on its 777-300s. The two airlines will offer trial versions of their in-flight Wi-Fi service beginning in early 2013.

“Being permanently connected is now part of our customers’ daily lifestyles. This trial run is the first step of (AFA)’s and (KLM)’s long-term strategy to offer in-flight connectivity solutions across our long-haul fleet. We are pursuing our investments to even better serve our customers and to remain at the forefront in terms of innovations and mobile services,” Christian Herzong, Senior VP Marketing for (AFA)/(KLM) said.

The trial phase will be conducted over the year 2013 on two 777-300s, operated by each airline. During this period, travellers will be able to hook up to the internet via their Wi-Fi enabled smartphone, laptop or tablet PC at a fixed rate, as well as use their mobile phone for Short Message Service (SMS) or e-mail, whatever their travel class.

AirFrance Industries (AFI) (KLM) (E&M) signed a contract with Orenair (ORB) covering maintenance and repair for (ORB)’s (APU)s on its 777 and 737 airplanes.

July 2012: Air France­ (AFA) -(KLM) incurred a second-quarter net loss of -€895 million/-$1.1 billion, significantly widened from a -€196 million net deficit in the year-ago period. It noted that much of the net loss can be attributed to one-time charges, particularly those related to its cost restructuring program and accounting changes.

The airline group’s second-quarter operating loss was -€66 million, more than halving a -€145 million operating deficit in the 2011 June quarter. (AFA) - (KLM) Chairman, Jean-Cyril Spinetta said in a statement, “Even though these second quarter [operating] results represent a year-on-year improvement, they remain in negative territory. These results demonstrate how crucial the success of the "Transform 2015" [cost restructuring] plan is to the turnaround of the group. In an increasingly uncertain global economic environment compounded by oil price and exchange rate volatility, an improvement in our productivity and costs is even more necessary.”

(AFA) - (KLM), which boosted second-quarter revenue +4.5% to €6.5 billion, said it is maintaining “strict capacity control.” Second-quarter group passenger capacity was up just +0.3% year-over-year to 67.46 billion (ASM)s, while traffic heightened +2.4% to 55.82 billion (RPK)s. Load factor was 82.8% LF, up +1.7 points.

With the difficult second quarter following a shaky first quarter, (AFA) - (KLM)’s half-year 2012 net loss was -€1.26 billion, more than doubling a -€564 million net deficit in the prior-year period.

(KLM) Royal Dutch Airlines will launch 3X-weekly, Amsterdam - Harare, Zimbabwe A330-200 service on October 29.

(LOT) Polish Airlines has signed a long-term component support agreement with AirFrance Industries (AFI)/(KLM) (E&M) for its fleet of 787s, which will ultimately comprise eight 787s. (LOT) is scheduled to deploy the 787 in January 2013.

777-306ER (35947,L PH-BVI "Nationaal Park Vuurland" (on LHS) and "Tierra del Fuego National Park"(on RHS), delivery.

September 2012: AirFrance (AFA) continued expanding its Marseille (MRS) base on 3 September, taking over the service to Amsterdam (AMS) from its Dutch sister airline (KLM), which until now has operated four flights a day with (KLM) Cityhopper (AUK)’s regional airplanes. (AFA) now launches the route with three daily frequencies, but using bigger A319 airplanes. As a consequence of the switch, seat capacity is up by +9% on the route.

AirFrance (AFA) - (KLM) has partnered with Jetstar Airways (IMU) to offer daily one-stop flights between Australia's Gold Coast region and Europe, via Japan. Under the partnership, passengers can fly with (IMU) from Coolangatta to Tokyo or Osaka, and connect on AirFrance (AFA)'s services to Paris or (KLM) Royal Dutch Airlines' services to Amsterdam.

"From Australia, our group already offers more than >500 departures per week through code share or commercial partnerships with a range of airlines," said Tom Reeves, (AFA) - (KLM)'s Regional Manager Australia & New Zealand.

Troubled carrier, AirFrance (AFA) plans to refurbish its entire fleet of long-haul 777s in a bid to respond to the competitive threat, and perceived higher quality service, of Gulf and Asian airlines.

Launching the initiative at a Paris press conference on 18 September, (AFA) (CEO), Alexandre de Juniac said the airline would invest "hundreds of millions of euros" to improve its offering to passengers.

"The next three years will see a very big investment, considering we are in an austerity period," he says. "But it will dramatically improve the level of service and product. By 2015, we will be at the best, world-class standard."

He admits the refurbishment program is a direct response to the higher level of service provided by new entrants to the market: "Gulf and Asian carriers have set higher standards than we had previously and we must do better."

From 2014, (AFA) will fit completely new interiors, configured in a four-class layout, to its fleet of 19 777-300 and 25 777-200 long-range twinjets. This will be followed in late 2015 by a complete refurbishment of its fleet of 10 A380s, two of which will only have entered its fleet this year.

Following the arrival of the final A380s this year, no new long-haul airplanes are scheduled to enter the fleet before 787-9s ordered by parent company (AFA) - (KLM) begin to arrive - initially with the Dutch carrier in 2016.

These will be followed from 2017 by A350s, says de Juniac, although he points out that negotiations to firm its 25-unit order with Airbus (EDS) and Rolls-Royce (RRC), the type's sole engine supplier, are still ongoing. Maintenance of the powerplants is the sticking point, says de Juniac, although he is confident the parties can still hammer out a deal "in the next few months".

"I would rather take three or four months and come up with a good agreement rather than rush things and arrive at a bad one," he says.

Also launched at the same event was a new joint-venture partnership with telecoms firm Orange to provide voice and data connectivity on (AFA)'s short- and medium-haul fleet. Trials of the service will begin, however, on two 777s, one operated by (AFA) and the other by sister carrier (KLM) in 2013.

AirFrance Industries (AFI)/(KLM) (E&M) won a total care maintenance contract from Air Madagascar (MAD) covering two A340-300s. The two ex-AirFrance (AFA) A340-300s underwent painting and cabin modification in Paris Orly and in Amsterdam.

IN "MANAGEMENT" BELOW READ (UNDER TON DORTMANS) THIS MONTH'S "FLIGHTGLOBAL" ARTICLE: - "IN FOCUS: COMPONENT & ENGINE (MRO) CENTRAL TO (KLM) E&M GROWTH."

October 2012: (KLM) celebrated its 93rd birthday on Sunday October 7th!

SkyTeam (STM) Alliance member AirFrance (AFA)-(KLM), Oneworld (ONW) Alliance’s Air Berlin (BER) and Etihad Airways (EHD) have announced a strategic partnership to strengthen their route networks. The agreement includes code shares between (BER) and (AFA)-(KLM) from October 28.

The expansion in France allows (BER) to consolidate its market position from three to nine destinations via Paris Charles de Gaulle (CDG) and Paris Orly to Bordeaux, Lyon, Montpellier, Marseilles, Nantes and Toulouse.

(AFA) will add its code on (BER) flights via Berlin-Tegel (TXL) to Krakow (KRK), Gdansk (GDN) and Graz as well as from Dusseldorf - Dresden and Nice - Vienna. (KLM) and (BER) will exchange codes between Amsterdam-Schiphol (AMS) and (TXL) as well as to (KRK), (GDN) and Kaliningrad. (BER) will add its code via (AMS) on (KLM) to Edinburgh, Glasgow and Manchester.

Also from October 28, (KLM) will code share with (EHD) on its (AMS) - Abu Dhabi (AUH) flights and (EHD)’s daily, (CDG) - (AUH) service with (AFA). (EHD) gains access to 10 additional European destinations with (AFA) - (KLM), while (AFA) and (KLM) gain access to five further destinations in Asia and Australia.

"The partnership between (AFA) - (KLM), (EHD) and (BER) reflects our Group’s strategic positioning to ensure the best possible services between Europe and the rest of the world, by developing our network and airline partnerships,” (AFA) (CEO), Jean-Cyril Spinetta said.

(BER) (CEO), Hartmut Mehdorn said the cooperation “considerably strengthens our presence in the European market and link our Berlin hub to even more destinations.”

“This is (EHD)'s 40th code share agreement. It reflects the core elements of our 10-year master plan, driven by organic network growth, combined with the forging of strategic code share partnerships and minority equity investments in other airlines,” (EHD) (CEO), James Hogan said. The deal gives (EHD) a combined network of 321 destinations. Hogan confirmed talks with (AFA) began in July.

(KLM) will increase 3X-daily, Amsterdam (AMS) - Norwich service to 4X-daily on March 31. (KLM) will launch 3X-weekly, (AMS) - Fukuoka 777-200ER service on April 3.

(KLM) became the only airline to link Europe non-stop with Harare (HRE), capital of Zimbabwe, when the SkyTeam (STM) Alliance airline relaunched flights from its Amsterdam (AMS) hub on 29 October. Using 243-seat A330-200s, (KLM) now flies three times a week, stopping in Lusaka in Zambia (a route launched earlier this year) on the return. (KLM) last served Harare in 1999, then via Johannesburg. Erik Varwijk, (KLM) Managing Director and Executive VP, AirFrance/(KLM) International & the Netherlands, commented: “(KLM) sees great growth opportunities in Africa. This year, we launched service to Luanda in Angola and Lusaka in Zambia, and in 2011, we began serving Kigali in Rwanda. This new addition to our network strengthens our position in Africa.”

Air Berlin (BER) has been urged by its largest shareholder, Etihad Airways (EHD), to join cooperation talks with AirFrance (AFA) and (KLM) Royal Dutch Airlines that (EHD) has been holding for several months already. According to statements by (EHD) (CEO), James Hogan published by "Süddeutsche Zeitung" in Germany, (EHD) would have asked (BER) to start operating joint flights with (AFA)-(KLM).

(AFA) claims it is “far too early” to discuss whether Air Berlin (BER) might switch alliances from the Oneworld (ONW) to the SkyTeam (STM) alliance, following comments made by (AFA) (CEO), Alexandre de Juniac. Earlier this month, SkyTeam (STM) alliance member, (AFA) signed a strategic partnership with Etihad (EHD) and its equity partner (BER). The agreement includes code shares between (BER) and (AFA) - (KLM) from October 28.

In an interview with "Frankfurter Allgemeine Zeitung," de Juniac indicated a change of alliances could ultimately be in the cards for (BER). “If we further work closer together along the way, (BER) must decide if it would stick to the Oneworld (ONW) alliance or switch to the SkyTeam (STM) alliance of (AFA) - (KLM),” de Juniac said.

However, (AFA)’s Public Relations (PR) team is playing down the comments, saying the cooperation between (EHD), (BER) and (AFA) is already “a very ambitious first step.” “It is too early to speak about the next phase, meaning the alliance, at this stage.”

(KLM) Royal Dutch Airlines has reportedly presented a plan to its unions that foresees splitting the airline into two separate units. According to a report by Dutch newspaper "Het Financieele Dagblad," (KLM) is considering splitting off its European operations that would operate with a lower cost base than today and possibly based on its subsidiary, KLM cityhopper (AUK).

AirFrance Industries (AFI)/(KLM) (E&M) said its new engine test cell facility has entered service at Paris Charles de Gaulle airport. The test cell is now in use on (GE90-94) and (GE90-115) engine types and is (EASA) and (FAA) approved. It will soon become operational for a wider variety of engines.

AirFrance Industries (AFI)/(KLM) (E&M) and Lufthansa Technik (DLH) (LTK) agreed to launch a joint offer for providing Embraer EMB-Jet family component support. The two companies are now developing a business model for the product, which may expand to offer services beyond component support. Their existing (JV), "Spairliners" will develop the project.

Nordstar (Taimyr Airlines) (JSC) has signed a contract with AirFrance Industries (AFA) (KLM) Engineering & Maintenance (AFI KLM E&M) covering the repair and lease of (JSC)’s (CFM56-7) engines on its 737NG fleet.

(AFI KLM E&M) has also extended a long-term leasing contract for a (CF6-80C2) engine with AirBridgeCargo (ABC) as a spare for its 747-400F freighters.

(AFI) (KLM) (E&M) won an AerCap (DEA) contract for cabin modifications and an overhaul on one A321 airplane. It will conduct a general six-year check as well as a "C4" heavy maintenance check, will paint new livery, will overhaul the control system circuits and on-board computers and will change configuration of the economy (Y) class from 199 seats to 220.

November 2012: According to the UK's "Sunday Times", Delta Air Lines (DAL) wants to partner with AirFrance (AFA)/(KLM) to buy Virgin Atlantic (VAA) by purchasing the 49% stake in (VAA) held by Singapore Airlines (SIA), (whom has long indicated it has wished to be rid of it). Another factor is that 49% is the limit under foreign ownership rules, and (AFA)/(KLM) could buy Sir Richard Branson's 51%, so that the three SkyTeam (STM) Alliance partners could together assume full control.

(KLM) launched 3X-weekly, Amsterdam - Harare - Lusaka A330-200 service, returning to the Zimbabwean capital (Harare) after a 13-year break.

(KLM)/(AUK) will launch a twice-daily scheduled service from Manston Airport (MSE) in Kent, Southeast UK, to Amsterdam Schiphol, further consolidating its position as a significant player in the UK regional market. The new service will begin operating April 2, 2013 using Fokker F 70 jet airplanes, carrying up to 80Y passengers. (KLM)/(AUK) already operates to 16 airports in the UK and brands itself as “the UK’s largest long-haul regional airline.”

(MSE) is owned by New Zealand-based infrastructure investment firm Infratil, which also owns Prestwick Airport in Scotland. In January, the company decided to sell both airports, but no deal has been confirmed. In its half-year results, Infratil said both airports were “continuing to operate in a cost minimization basis.”

Infratil said it had “run an extensive sale process for the two airports” and “the impairment charge reflects market feedback received as part of this process.” It said it was continuing “to actively seek a buyer for the airports, while considering all other options available with respect to the ongoing operations.” In the meantime, it said it was working with local stakeholders "to review alternatives."

AirFrance Industries (AFI) has invested €43 million/$54.7 million in a new 5,000 sq m engine test cell based at Paris Charles de Gaulle Airport (CDG).

The ZEPHYR facility will test approximately 300 engines each year and is part of the AirFrance (AFA) “Transform 2015” plan in which it seeks to expand into high growth activities including component and engine. “The test cell will enable AirFrance Industries (KLM) Engineering & Maintenance to cover the entire maintenance process for engines such as the (GE90-94/115) equipping 777s, and the (CFM56) power plants equipping Airbus (EDS) airplanes in the A320 family, and the A340,” (AFI) said. “The new test cell is also ready to test the (GP7200) engines equipping the A380, and has been designed to adapt to the engines that will equip future generations of airplanes.”

The facility has been certified by the European Aviation Safety Agency (EASA), the USA (FAA), and the Civil Aviation Administration of China (CAAC). “The implementation of a new engine test cell at Paris-(CDG) enables us to reaffirm our position as a major player in the multi-product airplane maintenance business,” (AFA) Chairman & (CEO), Alexandre de Juniac said. “I hope we can push our presence with this facility also in markets like China. You have to move quickly in these markets [to be successful].”

In general, (AFI) expects a +10% annual growth rate for the industry in the Chinese Maintenance Repair & Overhaul (MRO) market, compared to a +1% growth rate in North America and Europe.

Cyprus Airways (CYP) retained AirFrance/(KLM) Consulting to help (CYP) restructure with both government aid and major labor concessions, assuming (CYP) can acquire them.

December 2012: AirFrance (AFA) - (KLM) has added an extra €500 million/$654 million to its savings target for 2013 - 2014, in an effort to match the margins of its peers. The changes are part of the group’s Transform 2015 restructuring plan.

Earlier this year, the Franco-Dutch airline group outlined plans for a €1.4 billion investment in 2013, followed by a further €1.6 billion in 2014.

However, an (AFA) spokeswoman said these figures have now been cut by -€500 million. (AFA) will deliver €300 million of the total, while the remaining €200 million will be cut from (KLM). Following the changes, (AFA) - (KLM)’s capital expenditure will be €1.1 billion in 2013 and €1.4 billion in 2014.

This forms part of a plan to slash -€2 billion from its net debt by the end of 2014, which will be achieved through cost savings and by limiting growth and investments.

It is also aiming to cut unit costs by -10% by securing new collective agreements, restructuring its medium-haul network, turning around its cargo operations and improving returns from its long-haul and maintenance activity.

(AFA) - (KLM) estimates its own margin for the 2011 - 2012 financial year to be -0.2%, compared to the International Airlines Group at 0.8% and Lufthansa at 2.2%.

The balance of power in the London Heathrow (LHR) long-haul market may once again shift, as the Virgin Group and Singapore Airlines (SIA) appear to be moving closer to selling a stake in Virgin Atlantic (VAA), possibly to Delta Air Lines (DAL) and AirFrance (AFA)-(KLM).

(SIA) in a short statement to the Singapore stock exchange says it is “in discussions with interested parties concerning the possible divestment of its 49% shareholding in Virgin Atlantic (VAA).” But it adds, “These discussions may or may not result in a transaction.”

The disclosure came after UK newspaper "The Sunday Times," reported that (DAL) is in talks with (SIA) to buy its 49% stake in (VAA). The report also says (DAL)’s SkyTeam (STM) Alliance partners AirFrance (AFA)-(KLM) is planning to buy part of the Virgin Group’s 51% stake in (VAA).

(DAL), meanwhile, is not commenting on the story, calling it rumor and speculation. If (DAL) proceeds with the acquisition, the move would provide a major boost to the (STM) Alliance’s access at (LHR), and at the same time curtail Star (SAL) Alliance’s reach at the airport, which has been limited by Lufthansa (DLH)’s sale of its BMI (BMA) division to the International Airlines Group (IAG) unit British Airways (BAB). (BAB) currently is the dominant player on transatlantic services from (LHR), a position that is strengthened by its joint venture with Oneworld (ONW) Alliance partner American Airlines (AAL).

In contrast, (VAA)’s strategic position has become weaker as its competitors grow. This prompted (VAA) in 2010 to appoint an adviser to investigate potential growth options, including alliance membership and buying a stake in another airline. Sir Richard Branson, (VAA)’s controlling shareholder through his Virgin Group, has said that he wants to remain involved in (VAA) even if part of (VAA) is sold.

(VAA)’s biggest asset is its transatlantic network from (LHR), the main gateway into the UK and one of the world’s most important business destinations. But (VAA) has been losing money. In the 12 months ending February 29, (VAA) posted a loss of -£80 million/-$128.3 million, compared to a profit of +£18.5 million in the previous year. (VAA)’s (CEO), Steve Ridgway, at the time said the loss was due to “sky-high fuel prices,” global economic uncertainty and a +25% increase in passenger duty fees. Ridgway is due to retire from his position in early 2013.

(VAA) is particularly vulnerable to high fuel prices. Its fleet of 42 airplanes includes four A340-300s, 17 A340-600s and 13 747-400s. These four-engine airplane types burn more fuel and are more expensive to maintain than newer models. (VAA) has taken steps to update its fleet by ordering 16 787-9s and six A380s. First delivery of the 787-9s and A380s is in 2014 and 2015, respectively, says (VAA).

Despite the cost exposure, (VAA) has valuable airport slots and may be of strategic importance to a USA carrier. It will still be difficult for (SIA) to secure a price comparable to what it paid for its stake in early 2000. (SIA) paid £600.25 million for the 49% share, which included a capital injection of £49 million. The deal valued (VAA) at £1.2 billion, but (SIA) has since written down the value of the shareholding.

AirFrance Industries (AFI)/(KLM) (E&M) named Vincent d'Andrea to (CEO) of its Engine Part Repair subsidiary, (CRMA), replacing José-Marie Louis who has been appointed Senior VP Engine Overhaul for AirFrance Industries (AFI). It also named former Senior VP Engine Overhaul, Anne Brachet to Senior VP Engineering & Airframe for (AFI).

See video "KLM-AFI - KLM EM" - -

January 2013: Garuda Indonesia (GIA) and (KLM) Royal Dutch Airlines signed a code share agreement for flights between Singapore and Denpasar. The two carriers said they also plan to cooperate in the maintenance of airplane components.

Insel Air (INS) and (KLM) Royal Dutch Airlines signed a code share agreement. The two carriers signed an interline agreement in July 2011.

Etihad Airways (EHD) will launch daily, Abu Dhabi - Amsterdam A330-200 service on May 15 in code share with (KLM).

(EHD) (CEO), James Hogan said the airline will launch a daily Amsterdam - Abu Dhabi service this summer. Flights will be operated by a two-class A330-200.

(EHD) already serves 17 European cities including Brussels, Dublin, Frankfurt, Geneva, London and Paris. (EHD) has already detailed plans to add Sao Paulo, Washington DC, and Ho Chi Minh City in 2013.

“We are delighted that Amsterdam will become a part of (EHD)’s global network from 15 May,” Hogan said.

(EHD’s code share partner, (KLM) is also planning to step up its flights to daily from the summer, taking the partners to two daily frequencies.

(KLM) and (EHD) also detailed plans to expand the code share, which was first announced in October 2012. The airlines already cooperate on (KLM)’s flights to Billund, Cardiff, Newcastle, Oslo and Stavanger, as well as (EHD)’s Colombo, Islamabad, Lahore, Melbourne and Sydney flights.

Under the new agreement, (EHD) will also place its code on (KLM)’s flights to Aberdeen, Barcelona, Bergen, Birmingham, Copenhagen, Edinburgh, Glasgow, Gothenburg, Helsinki, Leeds Bradford, Madrid, Nice Stockholm and Toronto.

In return, (KLM) will place its code on (EHD)’s flights to Baghdad, Basra, Calicut, Cochin, Dhaka, Erbil, Hyderabad, Kathmandu, Chennai, Male, Peshawar, Seychelles and Trivandrum.

By 2020, (EHD) is aiming to serve more than >100 destinations with a fleet of more than >150 airplanes.

Deutsche Lufthansa (DLH) slipped further behind European market leader AirFrance (AFA)-(KLM) Group after (DLH)’s disposal of UK carrier (BMI) (BMA) led to a dip in annual traffic, the standard measure for ranking airlines. (DLH)’s passenger traffic (the number of customers carried multiplied by the distance flown) fell about -1% to 206 billion revenue passenger kilometers (RPK)s last year, "Bloomberg" calculations based on data from (DLH) show.

That’s -9% lower than at (AFA)-(KLM), where the total increased +2.1% to almost 224 billion (RPK)s, with the gap between the pair widening from 5% in 2011. The (IAG), parent of British Airways (BAB), posted a gain of +4.4% to 176 billion, aided by its purchase of (BMI) (BMA) from (DLH), even after a drop in traffic at Spanish unit Iberia (IBE).

“(DLH)’s idea was to grow at London Heathrow (LHR) airport but it wasn’t able to get the scale it wanted. The (IAG) straight away rationalized and used (BMA) in an entirely different way.”

(DLH) said that 2012 traffic amounted to almost 205 billion (RPK)s, excluding (BMI), which it sold to the (IAG) on April 20. (BMA), which has since been folded into (BAB), contributed 1.41 billion (RPK)s in the first three months, according to figures from (DLH), which didn’t provide data for the first three weeks of April.

(DLH) transported 103 million passengers last year, up +2.4% on 2011, excluding (BMA) from both years, making it the European No 1 by that measure. (AFA)-(KLM) and the (IAG), now referred to as the International Consolidated Airlines Group SA, lured 77.4 million and 54.6 million travelers, respectively.

(DLH) Passenger Airlines, which includes the namesake brand and discount division Germanwings (RFG), also transported +2.4% more passengers, while the Swiss (CSR) and Austrian Airlines (AUL) units carried +3% and +1.8% more.

(DLH) increased capacity (ASK)s only +0.6 percent in 2012, excluding (BMA), versus a +2.2% traffic (RPK) increase on that basis, so that the load factor, a measure of occupancy, advanced +1.2 points to 78.8% LF.

The (IAG) added +2.8% more seats, barely half the traffic gain, and also lifted occupancy +1.2 points, to 80.3%. (AFA)-(KLM), which has its headquarters in Paris, lifted capacity +0.6%, giving the same increase in occupancy for a load factor of 83.1% LF.

Europe’s major airlines are reviewing their commitment to flights within the region in the face of competition from Ryanair (RYR) and EasyJet (EZJ), especially where services don’t feed traffic onto their long-haul services. “They’re all cutting short-haul where it’s not profitable. Keep capacity discipline and you get that demand squeeze and can push up prices.”

AirFrance Industries (AFI) (KLM) (E&M) was selected by AlMasria Universal Airlines (ALU) to deal with an airplane on ground (AOG) situation involving (CFM56-5B) engines. The (MRO) provider organized the lease of two spare engines for (ALU), the Egyptian carrier and a shop visit for the two faulty engines.

AirFrance Industries (AFI) (KLM) (E&M) won a contract from Air Pacific (APC) to support its incoming A330/A340 fleet. (AFI) (KLM) (E&M) will provide fleet management services, component repair, and availability via dedicated logistics support, access to its dedicated regional A330 spares pool, and the supply of an A330 main base kit on Air Pacific (APC) premises.

February 2013: The AirFrance (AFA)-(KLM) Group reported a full year net loss of -€1.2 billion/-$1.9 billion, widening from a -€809 million loss in the year-ago period. The airline said the result was due to exceptional items, including a €471 million restructuring provision. “We have reduced our losses and revenues have held up well. We are beginning to see the initial results of our "Transform 2015" restructuring plan,” said (AFA)-(KLM) Group Executive VP Finance, Philippe Calavia. He said the net result was “strongly negative” because of a €471 million restructuring hit. Other exceptional items included a €173 million goodwill write-down from the acquisition of Belgian regional airline (VLM) Airlines and a €97 million boost from the sale of shares in Information Technology (IT) provider, Amadeus. (AFRA)-(KLM) also booked a €100 million non-cash hit due to changes in pension reporting rules.

Revenue rose +5.2% to €25.6 billion, while operating expenses increased +4.9% to €25.9 billion, producing an operating loss of -€300 million, improved +15% from a -€353 million prior-year operating loss. The revenue boost was offset by an additional €890 million in fuel expenses, which went “well beyond” the group’s initial forecast. Excluding currency effects and fuel, operating costs rose +0.5%. Calavia said this shows the initial effects of "Transform 2015."

He added the group’s operating losses narrowed by €112 million during the second half of the year, although this was “limited” and “not sufficient.” (AFA) has also focused on reducing its net debt, slashing this figure by -€549 million in 2012 to below €6 billion. This will improve its access to additional funding.

Traffic rose +2.1% to 223.9 billion (RPK)s on a +0.6% increase in capacity to 269.3 billion (ASK)s, producing a record-high load factor of 83.1% LF, up +1.2 points.

Yield rose +4.4% to 8.6 cents as (RASK) increased +5.9% to 7.15 cents and (CASK) increased +4.9% to 7.24 cents. (CASK) ex-fuel and currency exchange fluctuations, and the pensions hit was -1.1% down.

AirFrance (AFA)-(KLM) Group Chairman & (CEO), Jean-Cyril Spinetta declined to comment on when the business is likely to breakeven. He said (AFA)-(KLM) has “clear objectives and commitments” on capacity and cost, which are both controllable. However, he said hitting breakeven also depends on three major uncontrollable external factors: the economy, fuel prices, and exchange rate fluctuations.

(AFA)-(KLM)’s Cargo division is facing a “drastic and substantial re-organization” after posting a -€222 million/-$291 million full-year operating loss, compared to a -€60 million loss in 2011.
“This result cannot be satisfactory. It requires drastic and substantial reorganization steps,” (AFA)-(KLM) Chairman & (CEO), Jean-Cyril Spinetta said at the release of the group’s 2012 financial results. Spinetta detailed plans to slash the division’s losses by -€140 million, although he added: “This is not an (AFA)-(KLM) crisis. This is a crisis for all cargo leaders around the globe.”

Full year cargo revenues fell -2.7% to €3.06 billion, although the decline would have been -6.4% excluding positive currency effects. In the first three quarters of the year, unit revenues fell by -4.1%, -6.7% and -5.7%, respectively, although they rose +1.5% in the final quarter. “It is not a very positive picture,” (AFA)-(KLM) Executive VP Finance, Philippe Calavia said. “There may be a glimmer of hope in quarter four, when we succeeded in maintaining unit revenues as slightly positive, but let’s not draw any hasty conclusions. We need to continue to tightly control capacity in that business.”

Annual (ATK)s for the year were down -3.5%, masking a deepening of cuts from -2.2% in the first quarter to -5.5% in the fourth quarter, but the total cargo traffic drop was even sharper at -6.3%. This pushed the average load factor down -1.9 points to 64.5% LF.

Since 2009, the group has slashed its full freighter fleet from 25 airplanes to just 13 today, comprising nine in Amsterdam and four in Paris. Around 31% of its total cargo is carried by full freighters, while the remainder is transported as belly freight or in Combis.

However, overcapacity, especially from main Asian markets, continues to be a problem. With this in mind, (AFA)-(KLM) is planning to cut its cargo capacity by a further -0.5%, of which 6% will stem from its full freighter operations. It has returned three freighter airplanes to lessors, wet-leased a 747-400ERF to new partner, Etihad Airways (EHD) and sealed a joint-venture (JV) with Kenya Airways (KEN) covering another airplane on China - Africa routes. (AFA)-(KLM) hopes these capacity cuts will shave around -€50 million from its cargo losses.

A further -€40 million in savings will be trimmed from the cargo division’s controllable cost base, forming part of its "Transform 2015" restructuring plan. Finally, simplified products and improved revenue management policies are slated to deliver another +€50 million in revenues.

(KLM) (CEO), Peter Hartman will retire in July and AirFrance (AFA)-(KLM) veteran, Jean-Cyril Spinetta is planning to exit by no later than April 2014.

“The supervisory board of (KLM) has decided to accept the retirement of (CEO) Peter Hartman and to ask Camiel Eurlings to take over from July 1 this year,” (AFA)-(KLM) Group Chairman & (CEO), Jean-Cyril Spinetta said.

Eurlings is (KLM) Managing Director & Executive VP of (AFA)-(KLM) Cargo. He is also a former Dutch Transport Minister and Member of the European Parliament. “(KLM) remains in very capable hands,” Spinetta said, adding that Hartman will continue to advise the company.

Hartman said he plans to spend more time with his grandchildren after his retirement. He will remain on the supervisory board of (AFA)-(KLM) and a number of other companies, and joked that his greatest challenge would be not taking on too much work.

(AFA)-(KLM) veteran, Spinetta is also planning for retirement. Spinetta said: “I also have a lot of grandchildren” and he added that he is also planning his exit. “The very last moment would be April 2014.” Spinetta returned to his former position as (AFA) (CEO) in late 2011 following the departure of former (AFA) (CEO), Pierre-Henri Gourgeon. Spinetta was later replaced as (AFA) (CEO) by Alexandre de Juniac, although he has continued as group (CEO) & Chairman.

AirFrance Industries (AFI) (KLM) (E&M) signed an engine support contract with Nordwind Airlines (NWD) covering its (CF6-80C2) engines powering six 767-300ERs. The contract covers engine repair and overhaul services and availability and lease support.

March 2013: The planned code share agreement between Oneworld (ONW) alliance member, Air Berlin (BER) and AirFrance (AFA) - (KLM), a SkyTeam (STM) alliance member, should be in place by April.

(BER) (CCO), Paul Gregorowitsch said that the process has been delayed as the two alliances work out partnership details. “But we have the commitment from (AFA) and (KLM) board of managers as well as from Etihad Airways (EHD). I hope from April we can implement it,” he said.

Code share agreements with majority owner (EHD) to Japan and China via Abu Dhabi have been implemented. “We are working on code share connections to India and, I hope, in two to three months, we can also establish a code share with Virgin Australia (VOZ) to cover the total Australian market,” Gregorowitsch said.

March 2013: Virgin Atlantic (VAA) is likely to form a tie-up with SkyTeam (STM) Alliance members, AirFrance (AFA)-(KLM) and Alitalia (ALI), as part of a new joint venture (JV) with its new part-owner Delta Air Lines (DAL).

Late last year, (DAL) confirmed plans to acquire 49% of (VAA) from Singapore Airlines (SIA) and cement a (JV) with (VAA) by the close of 2013. The two carriers have applied for antitrust immunity (ATI) and (VAA) is mulling its alliance options, although (DAL)’s (SKT) Alliance is a likely choice.

However, it has now emerged the (ATI) could also include (AFA)-(KLM).
“The five-way (ATI) application is designed to ensure that (ATI) is granted widely enough to allow the efficient operation of both the Delta (DAL)/Virgin Atlantic (VAA) (JV) and the (DAL)/(AFA)/(KLM) (JV). It does not affect the scope of (VAA)’s (JV) with (DAL) — which is the core focus at this stage,” a (VAA) spokeswoman said.

(VAA) has currently only committed to enter a two-way (JV) with (DAL).

(AFA)-(KLM) Chairman & (CEO), Jean-Cyril Spinetta recently welcomed the (DAL)-(VAA) tie-up, saying it would boost the (SKT) Alliance’s transatlantic (JV). He also said it would be “logical” for (VAA) to join the (STM) Alliance.

Jean-Cyril Spinetta and Leo van Wijk, who masterminded the first merger between two European flag carriers in 2004, are stepping down and handing over the reins of AirFrance (AFA)-(KLM) Group to a younger generation. The board of the French-Dutch group appointed Alexandre de Juniac, Chairman & (CEO) of Air France-KLM Group and Peter Hartman, Deputy (CEO), succeeding Vice Chairman, van Wijk, as of July 1.

De Juniac became Chairman & (CEO) of AirFrance (AFA) in 2011. He will be replaced in that role by (AFA) (CFO), Frederic Gagey. (KLM) named Camiel Eurling, former Head of KLM’s Cargo Operations and a former Dutch Transport Minister, to succeed Hartman as (CEO) & President of (KLM).

The reshuffle of the (AFA)-KLM Group’s top management is part of a broader plan to restructure the company’s governance and move toward a deeper integration of the two airlines to facilitate cost reduction, eliminate overlaps that still exist 10 years after the merger was completed and speed up decision-making. The new corporate structure was designed at the end of 2011, when the (AFA)-KLM Group and (AFA) (CEO), Pierre-Henri Gourgeon was ousted following deepening losses and increasing debt.

Veterans Spinetta and van Wijk were called back to return the group to solid footing. An in-depth restructuring and cost-cutting program, called "Transform 2015," was launched last year simultaneously at (AFA) and (KLM).

Spinetta, who will turn 70 in October, announced earlier this year he would step down in 2014, but the date has been moved forward by nine months.

In a joint statement, Spinetta and van Wijk said that "Transform 2015" is starting to “bear fruit” thanks to the agreements signed by both airlines with the representative trade unions and works councils. Also the group’s net debt decreased in 2012, and the new governance of the (AFA)-(KLM) Group will be in place by July. “Under these circumstances, we believe the timing is right for the new management team to take over in order to ensure the continuity of the group’s economic and financial recovery and the implementation of its new governance,” the executives said.

(AFA)-(KLM)’s recovery plan aims to reduce the company’s debt by -€2 billion/-$2.6 billion and improve its productivity by +20% to better compete with the low-cost carriers (LCC)s and Middle East operators. The plan will lead to the loss of -5,000 jobs at (AFA) and -1,300 at (KLM).

(KLM) Royal Dutch Airlines will launch a series of biofuel-powered intercontinental flights from New York (JFK) Airport to Schiphol Amsterdam Airport on a 777. The initiative is in partnership with Schiphol Group, Delta Air Lines (DAL), and the Port Authority of New York & New Jersey. The flight series will depart weekly from (JFK) for 25 weeks running partially on sustainable biofuel.

Boeing (TBC) and (KLM) Royal Dutch Airlines have begun a series of commercial flights that will demonstrate how several advanced technologies, fuels and concepts can significantly improve operational efficiency, save fuel and reduce carbon and noise emissions. The technology demonstration encompasses all aspects of an airplane’s flight (pre-flight, takeoff, cruise, descent and post-landing).

The first of the flights, with a (KLM) 777-200 flying round trip from Amsterdam Airport Schiphol to John F Kennedy International Airport in New York, is scheduled this month. A total of 26 flights are planned for a program called “Optimal Flight” that will continue through 2013.
“The art of the possible comes to life with Optimal Flight: It combines all of Boeing (TBC)’s current flight efficiency projects in a single program to demonstrate the most efficient, environmentally progressive flight possible,” said Mike Caflisch, Director Airspace Programs for (TBC)’s Digital Aviation Customer Solutions. “This demonstration program will help us determine where next to focus our research and development to deliver improvements to air traffic management and airline services for our customers.”

Each flight is being powered in part by sustainable aviation biofuel sourced from used cooking oil. (TBC) is at the epicenter of the industry’s efforts to develop and commercialize renewable fuel sources that don’t compete with food, water or land resources.

The flights also feature new services that provide various advisories directly into the airplane’s flight management computer (FMC) and mobile device in the flight deck.

Developed by Boeing Research & Technology, the flight services highlight applications that increase real-time situational awareness for pilots (FC) using advanced digital aviation and air traffic management concepts. They include:

* Automation to integrate the dispatch and modified versions of the flight plan and performance data into the (FMC). This saves work for the flight crew (FC), allows for real-time adjustments and reduces errors by eliminating the need to make repeated (FMC) entries.

* Procedures and software applications that provide the flight crew (FC) with recommendations to optimize the airplane’s speed variance, while providing real-time weather advisories in flight to save fuel and enable more accurate way point arrival predictions.

If the Optimal Flight Program is successful, Boeing (TBC) and (KLM) will establish new operational procedures and recommendations for follow-on development programs with the partners, including (NLR), (TU) Delft (Delft University of Technology), John F Kennedy International Airport, Gander, Shanwick, (NATS) Domestic and Schiphol Group.

There is also focused research and development through a joint agreement between Boeing (TBC), (KLM), Amsterdam Airport Schiphol and Air Traffic Control (ATC) in the Netherlands. This agreement is an extension of an agreement first signed in 2002 to develop solutions for the sustained growth of aviation in the Netherlands. “Boeing (TBC) is committed to improving the efficiency of flight by working with progressive airlines such as (KLM) to accelerate smart technologies and make them available for regular commercial use,” said Julie Felgar, Managing Director Environment & Aviation Policy for Boeing Commercial Airplanes (BCA). “Through our support and services organization, and commitment to relentless research, we can help ensure their airplanes are safe, reliable and on time. This is yet another great example of a value-added partnership between Boeing (TBC) and the Netherlands, a country with an outstanding aerospace and technology industry,” said Brian Moran, VP, Boeing Northern Europe. “(KLM) is one of the most progressive airlines in the industry and a great partner in our ongoing commitment to finding ways to realize savings in fuel and reductions in emissions and noise.”

AirFrance (AFA)-(KLM) will cut capacity on its underperforming medium-haul network this summer a further -5.3%, while boosting long-haul capacity +2%.

The strict capacity control, representing +0.3% growth overall, follows a sharp downturn in (AFA)-(KLM)’s full-year profitability. “Following the early adoption of certain measures during winter 2012 - 2013, all the actions decided as part of "Transform 2015" will be implemented in summer 2013,” the company said. (AFA)/(KLM) said its medium-haul network reorganization is “still underway,” leading to the -5.3% capacity reduction in capacity. Likewise, its regional flights (performed by BritAir, Regional and Airlinair) are being shifted to the new HOP! brand, which will launch March 31.

The group is channeling its long-haul capacity increase into emerging markets, including Africa (up +8.1%), Asia-Pacific (up +5.6%) and Latin America (up +3.4%). It will open new services to Montevideo, Kuala Lumpur, and Minneapolis, and boost frequencies to destinations including Bangkok, Guangzhou, Libreville, and Havana.

(AFA) will review its regional hubs this fall, following a lackluster 2012 performance from its domestic and medium-haul operations. In October 2011, (AFA) announced a “commercial offensive” from the French provinces aimed at challenging its low-cost carrier (LCC) rivals. This initiative involved the creation of four new regional hubs at Bordeaux, Marseille, Nice, and Toulouse. However, a number of routes and frequencies have already been cut, prompting speculation about possible base closures.

“Medium-haul losses were not reduced in 2012, in fact there was a slight increase over 2011 and above all this came from the regional bases,” (AFA)-(KLM) Group Chairman & (CEO), Jean-Cyril Spinetta said. He added that the company will take a “very strong look” at the regional bases in September to take stock of the situation.

However, he stressed this would simply be an evaluation of “where we are” and added that no base closures were expected. “I don’t have the impression that we will close the bases in September,” he said.

Marseille was the first to receive a capacity boost, followed by Toulouse and Nice in spring 2012 and Bordeaux last summer. Spinetta stressed it was too early to tell whether the strategy has been a success. Conversely, leisure operation Transavia (which has arms in both France (TVF) and the Netherlands (TAV)) turned in a bright performance. Revenues rose +9% to €852 million/$1.1 billion, off the back of a +3% increase in capacity and a +4% uptick in demand. No profitability figures were given, although (AFA)-(KLM) said Transavia (TVF) is close to breakeven.

Transavia France (TVF) will boost its fleet from eight to 11 airplanes this year, while (AFA)’s core Airbus (EDS) medium-haul fleet will be slashed by 16 airplanes this summer. Spinetta said the removal of the 16 airplanes will only lead to a “slight” drop in production because unions have agreed to greater productivity on the same pay.

“The [medium-haul] result for 2012 was quite obviously disappointing, but in 2013 we will post significant improvements,” Spinetta said. “Now we have renegotiated our collective agreements and identified new ways of operating the airplanes, all the structures are in place. This did not fully apply in 2012, but it will in 2013 and I am convinced this will improve.”

AirFrance (AFA) and (KLM) have agreed to pay BRL14 million/$7 million to Brazil’s (CADE) as a settlement for alleged cargo cartel activity. (CADE) reporting Commissioner, Ricardo Machado Ruiz said (AFA), (KLM) and two individuals admitted liability and agreed to pay the fine, which was based on their revenues and “the extent of their participation in the alleged cartel.” The investigation, which has been ongoing in Brazil since 2006, related to fuel surcharges on cargo shipments. This is the first settlement (CADE) has signed as part of this investigation. In 2010, a draft agreement with Aerolíneas Brasileiras (ABSA) (now renamed TAM Cargo (BSB)) was rejected by (CADE)’s tribunal.

Similar cases involving a number of airlines are underway in other countries, such as Australia.

AirFrance Industries (AFI) (KLM) (E&M) won a contract from Corendon Airlines (CDN) to provide engine maintenance services for its (CFM56-7)s. The contract includes two service types; core performance restoration, a maintenance procedure between a complete overhaul and on wing maintenance, and life cycle parts replacement, the replacement of used engine parts after a given number of cycles.

(KLM) Royal Dutch Airlines has introduced its new world business class (C) interior, featuring new full-flat seats, carpeting, panel decorations, curtains, lighting, blankets, cushions and upholstery.

(KLM) said the full-flat Diamond Seat, manufactured by BE Aerospace, is positioned to ensure greater privacy. The number of seats in world business class (C) will be reduced from 42 to 35 aboard 22 747-400s.

The new carpet is made partly of discarded (KLM) ladies’ uniforms. The airline said it recycles all of its carpets in collaboration with carpet manufacturer Desso. The new design will be inaugurated in July, and the entire 747-400 fleet should see interior redesign completion by April 2014.

SEE ATTACHED - - "KLM-2013-03 - NEW WORLD C CLASS."

May 2013: AirFrance (AFA) - (KLM) Group reported a first-quarter net income of +€630 million/+$827.6 million, widened from a loss of -€379 in the year-ago 1st quarter.

Delta Air Lines (DAL) opens seasonal daily, New York (JFK) - Shannon 757-200 service on May 11, in cooperation with AirFrance (AFA)-(KLM). It also begins 6X-weekly, New York (JFK) - Keflavik 757-200 service on June 2, in cooperation with (AFA)-KLM. Also seasonal 6X-weekly, Atlanta - Venice 767-300 service opens June 2, in cooperation with Alitalia (ALI).

(KLM) Royal Dutch Airlines and Pegasus Airlines (PGS) have signed a code share effective for travel June 3. Passengers will be able to transfer between (PGS) and (KLM) flights through Amsterdam Schiphol Airport, Istanbul Sobiha Gökçen Airport and Izmir Adnan Menderes Airport. An interline agreement also allows passengers to travel on a (KLM) ticket between any airport served by (PGS) in Turkey and any airport served by (KLM).

AirFrance (AFA) and (KLM) Royal Dutch Airlines have equipped two 777-300s for an in-flight connectivity trial through the end of 2013.
The trial (which was launched Wednesday on an Air France flight to New York and KLM service to Panama) will give passengers access to Wi-Fi, text messaging, email and live television via Panasonic Avionics’ eXPhone service and in-flight mobile phone operator AeroMobile.

(AFA)-(KLM) offer live TV as a complimentary service, streaming news, sports, airline and destination information through a specially designed in-flight website. However, it will charge €10.95/$14.13 per hour or €19.95 per flight for wireless Internet access, which will be enabled at 20,000 ft, and mobile phone text messaging and data will be billed via passengers’ own mobile phone contracts.

“Since we launched in 2008, over >17 million passengers have connected to AeroMobile in-flight and we’re seeing huge demand from consumers who want to stay connected in the air. We expect the number of airplanes offering our service to double over the next 12 months, as more and more airlines see the benefit of offering in-flight connectivity,” AeroMobile (CEO), Kevin Rogers said.

AirFrance Industries ((AFI) (KLM) Engineering & Maintenance will support Afriqiyah Airways (AQY)’s (CF6-80E1) engines on (AQY)'s two A330-200s.

Petra Airlines (PET) has signed a contract with AirFrance Industries (AFI) (KLM) Engineering & Maintenance covering component support for two A320s now and a third airplane by year end. The agreement includes flat-rate repair services and flight-hour pool access.

(KLM) is to take delivery of two 777-300ERs in spring 2015, one from Boeing and another from Air Lease (ALE), taking its total 777-300ER fleet to 10 airplanes. It has also extended leases on three 737-800s and one 777-200ER that are already operating in (KLM)’s fleet. A (KLM) spokesman confirmed that (KLM) has ordered one airplane direct with Boeing (TBC). This is due to arrive in April 2015.

The Air Lease (ALE) airplane, also a new 777-300ER, will be delivered in March 2015 and will remain with (KLM) on long-term lease. The spokesman said that the two additions will take (KLM) to a total of 10 777-300ERs.

SEE ATTACHED PHOTO - - "KLM-2013-05 - WORLD BUSINESS CLASS WBC."

June 2013: AirFrance (AFA) - (KLM), which has a historically strong position in Africa, continues to expand services in Africa and Brazil.

(AFI) (KLM) (E&M) and IndiGo (IGO) are increasing cooperation on their A320 component support contract.

(KLM) (E&M), has a new contract with French regional airline HOP!, which includes long-term support of 26 Embraer EMB-170s and EMB-190s. Spairliners has 10 regional airlines under contract. Spairliners is a joint venture (JV) of (DLH) (LTK) and (AFI).

July 2013: (KLM) and Moscow Sheremetyevo Airport celebrated the 55th anniversary of (KLM)’s service to Moscow from its Amsterdam base.

The AirFrance (AFA)-(KLM) Group reported a first-half net loss of -€793 million/-$1.05 billion, narrowed from a deficit of -€1.27 billion for the same period last year. Revenues were up +1.3% at €12.3 billion. Operating costs dropped -0.6%, mainly due to a -4.5% reduction in fuel costs and a -1.1% trimming of personnel costs. Staff numbers dropped some -3,500.

AirFrance - (KLM) - Martinair Cargo (MTH) began Abu Dhabi service. It is offered on 747 services as a stop on India and Asia routes.

AirFrance Industries (AFI) (KLM) (E&M) and (KLM) Cityhopper (AUK) have signed a maintenance agreement covering (AUK)’s Fokker F 70s. In addition to heavy maintenance checks, the contract includes modification work. The work will be carried out by (KLM) UK Engineering.

August 2013: (KLM) is one of the world’s oldest airlines, having launched flights under that name as far back as 1920. Analysis of the airline’s network over the last year shows it to be one of Europe’s most ‘stable’ airlines. Just four routes were dropped, and five added during the last 12 months. Non-stop services to Bahrain, Khartoum and Tehran were dropped completely (Bahrain is now served via Abu Dhabi), while the Marseille route was ‘handed over’ to its parent company, AirFrance (AFA). In return, (KLM) took over (AFA)’s Amsterdam - Lyon service, as well as starting new flights to Alesund in Norway, Fukuoka in Japan, Harare in Zimbabwe, and Manston in the UK. At present, the only additional new route planned for this winter, is Florence, which SkyTeam (STM) Alliance partner, Alitalia (ALI) is also ‘handing over.’

London Heathrow (LHR) is (KLM)'s busiest route; one of 14 UK airports served.

Analysis of KLM’s routes with the highest weekly seat capacity, reveals London Heathrow (LHR) as the clear winner. The 370 km sector is operated with over 70 weekly flights this August, generating almost 10,000 weekly seats each way, more than >3,000 more than the next destination. In fact, only 1,100 weekly seats separate the next 11 airports in (KLM)’s rankings.

SEE ATTACHED - - "KLM-2013-08 - TOP 12 ROUTES."

The addition of Manston, in the SE corner of the UK, brings to 14 the number of UK airports served by (KLM) from Amsterdam Schiphol, which has been promoted in adverts as “London’s fourth airport” for decades. Indeed some of these airports no longer have (or never have had) direct links to London Heathrow operated by British Airways (BAB). However, significantly, Amsterdam - Liverpool services were dropped last March.

Oslo is fourth in the busiest-route rankings, and the addition of Alesund to the (KLM) network, at the start of the summer season, brings to seven the number of Norwegian airports with direct links to (KLM)’s global network at Amsterdam.

Fukuoka is (KLM)'s latest long-haul route; also five destinations in China are served.

(KLM)’s long-haul network is truly global, serving over >60 major cities non-stop with long-haul flights. The newest of these is Fukuoka in Japan, (KLM)’s third destination in the country after Tokyo Narita and Osaka Kansai. (KLM) also serves five destinations non-stop in China (Beijing, Chengdu, Hangzhou, Shanghai, and Xiamen). This compares favorably with AirFrance (AFA) (four from Paris (CDG)), (BAB) (just two from London Heathrow), Finnair (FIN) (four from Helsinki), Lufthansa (DLH) (four from Frankfurt), and even Turkish Airlines (THY) (three from Istanbul).

* Long-haul Regions & Destinations:

Africa (12): Accra (7); Cairo (5); Cape Town (4); Dar Es-Salaam (7); Harare (3); Johannesburg (7); Kigali (7); Kilimanjaro (7); Lagos (7); Luanda (3); & Nairobi (7).

Asia (19): Almaty (5), Bangkok (7), Beijing (7), Chengdu (4), Delhi (7), Denpasar/Bali (7, via SIN), Fukuoka (3), Hangzhou (3), Hong Kong (7), Jakarta (7, via KUL), Kuala Lumpur (7), Manila (7, via TPE), Osaka Kansai (7), Seoul Incheon (7), Shanghai (12), Singapore (7), Taipei (7), Tokyo Narita (11), & Xiamen (3).

Middle East (8): Abu Dhabi (7), Bahrain (7, via (AUH)), Dammam (3), Doha (5), Dubai (7), Kuwait (4), Muscat (5, via (DOH)), & Tel Aviv (7).

North America (12): Atlanta (7), Calgary (7), Chicago O’Hare (7), Dallas/Fort Worth (5), Houston (7), Los Angeles (7), Montreal (7), New York JFK (14), San Francisco (7), Toronto (14), Vancouver (7), & Washington Dulles (10)

South & Central America (14): Aruba (5), Bonaire (7), Buenos Aires (3), Curacao (6), Guayaquil (6), Havana (3), Lima (7), Mexico City (7), Panama City (7), Paramaribo (4), Quito (6), Rio de Janeiro (5), Saint Maarten (3), & Sao Paulo (7).

There are no (KLM) services from Dutch regional airports; that’s transavia.com (TAV)’s job!

If British Airways (BAB) has been criticized in the past for focusing its international network purely on London, at least it still has domestic feeder flights from seven UK regional airports. (KLM) does not even do that. All of its services are from Amsterdam Schiphol, without even domestic feed, with the last domestic link (from Maastricht) disappearing at the end of the summer 2008 season. Admittedly, the Netherlands is a much smaller country, and Amsterdam can be reached by car, pretty much from anywhere in no more than three hours. Instead, Dutch regional airports are served by (KLM)’s low-cost carrier (LCC) subsidiary, transavia.com (TAV) (although not as a feeder airline) a move which Lufthansa (DLH) is, in some respects, copying with its replacement of many (DLH) services from regional German airports, with germanwings (RFG) flights.

AirFrance (AFA) - (KLM) has appointed Jacques Le Pape as Executive VP Corporate Secretary. He also becomes a member of the Group Executive Committee. Pape is former General Inspector in the French Finance Ministry Inspection Office.

AirFrance Industries (AFI) has named Anne Brachet as President, replacing Frank Terner, who moves to President of (AFI) (KLM) Engineering & Maintenance, which will steer its strategy and business development at Group level. Operational management of the businesses will remain the responsibility of Engineering & Maintenance Executive VPs of the two airlines.

Mattijs ten Brink has taken over as Managing Director and Chairman of Netherlands-based leisure carrier Transavia Airlines (TAV), part of the AirFrance (AFA)-(KLM) group. A veteran of the group, most recently serving as its Senior VP Cargo Sales & Distribution, ten Brink assumed his new role on August 1st, replacing Bram Gräber, who has become AirFrance (AFA)-(KLM)'s Executive VP Passenger Strategy.

AirAsia X (ASX)has extended its contract with AirFrance Industries (AFI) (KLM) Engineering & Maintenance for component support on its fleet of A330s and A340s. The extended agreement includes an additional seven A330s (one new, six leased) and now covers component repairs, pool access and logistics services for a total of 32 A330s and two A340s.

The initial contract, signed in 2009, applied to a single leased airplane, but has been extended twice in order to support the expansion of (ASX), including 25 new A330s ordered from Airbus and two A340s.

(AMG) Flite Components, a subsidiary of Aero Maintenance Group, which is a wholly owned AirFrance Industries (AFI) (KLM) (E&M) subsidiary, will support and repair radomes on Spirit Airlines (SPR)’s more than >50 A320-family airplanes. The multi-year agreement places spare radomes at key (SPR) maintenance locations and provides repair and full overhaul services for all (SPR) radomes.

(KLM) UK (AUK) Engineering will perform heavy maintenance checks on two 737NGs owned by Luxair (LUX).

September 2013: AirFrance (AFA) - (KLM) has appointed Warner Rootliep as General Manager UK & Ireland; Nicolas Henin as new Commercial Director UK & Ireland; and Gijs van Popta as Head of Sales.

AirFrance Industries (AFI) (KLM) (E&M) will support Air Canada (ACN)’s 11 new (GE90)s on five 777s. (ACN) had previously chosen (AFI) (KLM) (E&M) to provide exclusive support for 39 (GE90) engines on 18 airplanes.

October 2013: AirFrance (AFA) - (KLM) reported a third-quarter net profit of +€144 million/+$195.7 million, down -51% on last year’s third-quarter figure of +€296 million. However, Chairman, Alexandre de Juniac pointed to a growing operating profit of +€634 million for the quarter, up +29% from +€491 million year-over-year.

(KLM) Royal Dutch Airlines launched operations on its fifth route from Amsterdam (AMS) to Italy as it replaced Alitalia (ALI)’s A319-run operation to Florence (FLR). Beginning on October 27th, (KLM) offers 12 weekly flights to the northern Italian city and will operate the 1,100 km route using EMB-190s.

(KLM) begins 3x-weekly, Amsterdam - Buenos Aires - Santiago service on February 2.

(KLM) Royal Dutch Airlines supervisory board has voted in favor of nominating Cees ‘t Hart to become a Supervisory Director.

November 2013: Air France (AFA) - (KLM) reported an improved operating result for 3rd Quarter 2013 and confirmed its aim to increase 2nd Half 2013 operating profit by the same year-on-year amount as in 1st Half 2013. It has provided more details on the additional restructuring measures previously announced relating to headcount reduction and planned capacity in medium-haul and cargo.

However, while the group expects losses in medium-haul and cargo to reduce significantly in 2014, it does not expect to see the full impact of these measures until 2015.

As a result, it has pushed back its net debt reduction target by one year and focused its 2014 (EBITDA) target at the lower end of its previous range. Unfortunately, targets that start to slip have a habit of becoming more slippery.

(KLM) Royal Dutch Airlines began 12x-weekly, Amsterdam - Florence service. (KLM) extends 5x-weekly, Amstersdam - Rio de Janeiro 777-200 service through the winter season.

AirFrance (AFA) commenced operations on its 8,665 km sector to Panama City (PTY) on November 25th. The thrice-weekly 777-200 service from Paris CDG (CDG) is in addition to the daily flight flown by partner (KLM) from Amsterdam Schiphol. The uncontested route to Central America’s largest passenger airport expands the partnership’s network to Central and South America.

Kenya Airways (KEN) and AirFrance (AFA) - (KLM) signed an expanded joint venture (JV) for passenger and cargo services, effective January 1st, 2014. The two carriers will add new routes, in addition to those currently served in The Netherlands, France and Kenya: London - Nairobi, Amsterdam - Entebbe/Kigali, Amsterdam - Lusaka, and Harare, and Amsterdam - Kilimanjaro/Dar es Salaam.

AirFrance (AFA) - (KLM) has given Alitalia (ALI) until November 14 to agree to strict conditions that must be met before it participates in (ALI)’s capital increase. “We will help (ALI), but under very strict industrial, social and financial conditions,” (AFA) - (KLM) Chairman & (CEO), Alexandre de Juniac. “If these conditions are met by November 14, we can consider a strengthening of our partnership. If not, we will not follow.”

De Juniac insisted (ALI) must be run as a “normal business” and subjected to a “strong restructuring.” (AFA) - (KLM)’s prerequisites include (ALI) shrinking its medium-haul network, stabilizing its long-haul flying and completely restructuring its debts. “(AFA) - (KLM) is not in a position to have very deep pockets to finance everything,” De Juniac said.

(AFA) - (KLM) is (ALI)’s primary shareholder with a 25% stake. De Juniac struck out at (ALI) for not involving (AFA) - (KLM) in its refinancing discussions. “As primary shareholder, we would have liked to have been involved during the course of the negotiation, rather than discovering the results at the end of the discussion,” he said.

However, an (AFA) - (KLM) spokeswoman denied reports that it is calling on (ALI) to slash -5,000 jobs.

December 2013: AirFrance (AFA) - (KLM) is expanding services in Africa as it expects the airline industry to grow in the region. (AFA) - (KLM) Chairman, Alexandre de Juniac said, “Growing in Africa with partners is important. In East Africa, for example, we are doing this with Kenya Airways (KEN), our partner within the SkyTeam (STM) Alliance. But we have additional plans. One, we are helping [Ivory Coast start-up] Air Cote d’Ivoire (VRE) and are participating in a project in Central Africa.”

(KLM) will move its intra-European services into its regional subsidiary, (KLM) Cityhopper (AUK) as it seeks to cut costs.

The move will be phased in over the next few years and follows the collapse of talks between the Dutch carrier and its cabin crew (CA) trade unions intended to settle a new pay structure.

Although (KLM) mainline staff and airplanes (the carrier’s 737 fleet) will not be transferred to Cityhopper (AUK), short-haul cabin crew (CA) will in the future work under (KLM) Cityhopper (AUK) pay and conditions.

This, the airline said, is expected to produce cost savings of -€20 million/-$27 million a year by 2019, as part of the wider AirFrance (AFA) - (KLM) "Transform 2015" restructuring plan.

Standards of passenger service will not be reduced, it added.

Partnerships and (KLM) Royal Dutch Airlines are intertwined: (KLM) and Northwest Airlines (NWA) first joined forces in 1989 when (KLM) acquired a 20% holding in (NWA), then the two pioneered the industry's first modern joint venture (JV) in 1997, subsequently been imitated not just by trans-Atlantic peers but by airlines across the world. Partnerships today are even more prevalent and critical for KLM. The trans-Atlantic deal has expanded and (KLM) has a (JV) with Kenya Airways (KEN), among others.

But it is Asia where (KLM)'s breadth of partnerships is most evident and also where there are expansion opportunities, as (KLM) (COO) & Deputy (CEO), Pieter Elbers said in Amsterdam.

The launch of European flights by China's Sichuan (SIC) and Xiamen Airlines (XIA) could see (KLM) form a deeper partnership, adding to its existing relationships with China Eastern (CEA) and (JV) partner, China Southern (GUN). (KLM)'s historical relationship with Malaysia Airlines (MAS) has continued despite (MAS) joining the Oneworld (ONW) Alliance in 2013, and (KLM) has also added one-time foe Etihad Airways (EHD) as a partner. (KLM) would like a partner in Japan, its second-largest Asian market, and ideally hitch on AirFrance (AFA)'s relationship with (JAL). Mr Elbers describes a stable if limited relationship with SkyTeam (STM) Alliance heavyweight, Korean Air (KAL). The growth in partnerships comes as Asia widens its lead over North America as (KLM)'s largest long-haul market.

(AFI) (KLM) (E&M) will provide Saudi Arabia’s Alpha Star Aviation Services with repair services and access to a spares pool for A320 and A340 components on its (VIP) fleet.

January 2014: SEE ATTACHED - - "KLM-2014-01-2013 TOP WORLD AIRLINES-A/B).

(KLM) Royal Dutch Airlines begins 2x-daily, Amsterdam Schiphol - Turin service on May 26.

February 2014: Air France (AFA) - (KLM) remains heavily in the red despite halving its net losses in 2013, but forecasts a “return to the path of profitable growth in 2014.”

The Franco-Dutch group turned in net losses of -€349 million/-$478 million, a considerable improvement on 2012’s deficit of -€696 million, on revenue that was +0.4% higher at €25.5 billion.

Capacity (ASK)s grew +1.6% to 272.4 billion, while traffic (RPK)s were up +2.4% to 228.3 billion. Load factor for the group stood at 83.8% LF, up +0.6 point on 2012.

Long-haul represented 81% of the group’s traffic and 79% of capacity, with traffic up +2.5% and capacity up +2.4%, respectively. Medium-haul, which has been a long-standing problem for (AFA) in particular, showed a +1.7% rise in traffic (RPK)s and -1.2% reduction in capacity (ASK)s, raising load factor +2.2 points to 76.8% LF (a clear indication of the positive effects of "Transform 2015”) the Group said.

Cargo continued to suffer from weak global trade flows and overcapacity. Full-year revenues dropped -7.9% to €2.82 billion. To cope, the group reduced its full freighter capacity -11.5%, compared to an initial planned reduction of -6%. However, due to an increase in belly capacity in the passenger fleet, the overall drop in freight capacity was just -2.7%. Traffic dipped -4.6%, leading to a -1.3 point drop in cargo load factor to 63.2% LF.

Low-cost carrier (LCC) subsidiary, Transavia (TAV) turned in a -€23 million loss, compared to breakeven last time (the result of political unrest in some of its Mediterranean destinations plus launch costs of new routes).

“2013 marked an important stage in the Group’s turnaround,” Chairman, Alexandre de Juniac said. “We are clearly benefiting from the successful implementation of new working conditions and of the industrial plans adopted in all our businesses. As a result, we returned to a positive operating result despite the persistently challenging environment, generated robust free cash flow and reduced debt beyond initial targets. The additional measures announced in October 2013 are being implemented in medium-haul and cargo, and will start to bear fruit in the second half.

“While continuing to focus on strict cost discipline, we are also preparing the group’s future, with a major product upgrade at both (AFA) and (KLM), the ongoing adaptation of our medium-haul offer and the strengthening of our long-haul network. The (AFA) - (KLM) Group is undergoing a profound transformation, and I am confident we will return to the path of profitable progress in 2014 and beyond,” de Juniac said.

AirFrance (AFA) - (KLM) will take a $100 million stake in Brazilian low-cost carrier (LCC) (GOL) (GOT) as the Franco-Dutch group seeks to increase its interests in South America. The deal, part of which will see (AFA) - (KLM) buying (GOL) shares worth $52 million, or 1.5% of the Brazilian company’s value, will include an extension of a 2009 code sharing arrangement that allows (AFA) and (KLM) to place their codes on 28 (GOL) flights operating from Rio de Janeiro and São Paulo to Brazilian destinations. (GOL) (GOT) will place its codes on Brazil - European services.

The agreement will see the three airlines coordinate their sales forces and enhance cooperation in airplane maintenance, including engines, (APU)s and on board equipment.

Despite a recent blip, Brazil’s economy has been growing rapidly and will be further boosted over the next two years by the 2014 soccer World Cup and the 2016 Olympic Games taking place in the country.

(AFA) - (KLM) described the move as “a long-term strategic partnership.” (GOL) already has a strategic cooperative agreement with Delta Air Lines (DAL); (DAL) is a major partner of (AFA) - (KLM) and the USA and European carriers are members of the SkyTeam (STM) alliance. “We are pleased to bring our forces together with (GOL), a leading company in Brazil,” (AFA) - (KLM) (CEO), Alexandre de Juniac said. “We believe that this comprehensive strategic agreement will create value for our company and for our customers, and significantly strengthen the commercial position of (AFA) - (KLM) in the region.

“Brazil, host of the World Cup football and 2016 Olympic Games, has a growing business and leisure traffic. This collaboration is part of our strategy to build strong [long-term] partnerships in regions with high potential.”

(AFA) plans to start a new 3x-weekly service from Paris Charles de Gaulle to Brasilia from March 31, and also plans to start operating the Airbus A380 on its Rio and São Paulo sectors.

Since its inception in 2001, (GOL) has won nearly 40% of the Brazilian domestic market. It operates 141 Boeing 737NGs on a network of 51 destinations in Brazil and 10 countries around Central and South America.

(KLM), one of the oldest airlines in the world still operating under its original name, expanded its international network with the resumption of services from its Amsterdam (AMS) hub to Santiago (SCL) in Chile on February 2nd. The 11,982 km sector, which was last served in March 2000, will be operated thrice-weekly via Buenos Aires Ezeiza, utilizing (KLM)’s 355-seat 777-300s. The services to Santiago, the Chilean capital will face no direct competition from other carriers.

Myanmar Airways International (BRMJ) has contracted with (AFI) (KLM) (E&M) to provide engine support for the (CFM56-5B)s on its Airbus A320s.

AirFrance Industries (AFI) (KLM) (E&M) has contracted with Royal Jordanian (RJA) for component support on 13 A320s, including Main Base Kit, pool access and component repairs on a per-flight-hour basis.

March 2014: AirFrance Industries (AFI) (KLM) (E&M) will repaint five Etihad Airways (EHD) Boeing 777-200s, including stripping, sanding, painting and coating of the fuselage, vertical fin, stabilizer, engines and wings. The airplanes will be liveried in the (AFI) (KLM) (E&M) paint shop at Schiphol airport between February and April 2014.

Air France (AFA) - (KLM) has selected (GE) Aviation (GEC) (GEnx-1B) engines to power 25 Boeing 787s on order plus 12 leased 787 Dreamliners. (GE) said the total engine order is valued at more than >$1.7 billion. (AFA)- (KLM) and (GEC) also signed an agreement allowing (AFA) - (KLM) to offer maintenance, repair and overhaul (MRO) services for (GEnx-1B) engines.

“Under this agreement, (AFA) - (KLM) will be licensed to perform maintenance and overhaul work on the (GEnx-1B) engine and (GEC) will provide technical support and assistance on overhaul workscoping and component repair licenses, comprehensive material support and training.” (GEC) noted AirFrance (AFA) was the first operator of the (GE90-115B) engine on the 777-300ER.

Air Lease Corporation (ALE) announced a long-term lease agreement with (KLM) for a new Boeing 777-300ER with two (GE) Aviation (GEC) engines, scheduled for delivery in 2016.

(KLM) Engineering & Maintenance (E&M) has named Johan Bank as VP Engineering.

April 2014: AirFrance (AFA) - (KLM) reported a net loss of -€608 million/-$843 million for the quarter, slightly narrowed from the -€641 million loss for the same period in 2013. Revenue dipped -2.2% to €5.55 billion.

(AFA) - (KLM) said the first-quarter results were affected by the Easter holiday period moving to the second quarter and noted that foreign exchange losses were -€117 million. (IATA) (ITA) said earlier that the Venezuelan government had failed to honor a commitment to allow the repatriation of blocked airline funds at fair exchange rates.

First-quarter operating costs dropped -3.4% (2.3% ex-fuel). Traffic (RPK)s rose +2.1% to 53 million on a capacity (ASK) increase of +1.3%, resulting in a load factor of 82.8% LF, up +0.6 points.

Breaking down the results by airline, AirFrance (AFA)’s revenue dropped from €3.64 billion to €3.56 billion, while that of (KLM) dropped from €2.12 billion to €2.08 billion. Net profit figures were not given for the individual airlines, but (AFA)’s operating results narrowed from a loss of -€370 million to a deficit of -€279 million. (KLM)’s operating results widened from a loss of -€163 million to a loss of -€174 million.

The group said that, while the "Transform 2015" restructuring program is having a positive effect and remains on track, “the general operating environment remains tough.” It remains committed to its objective of attaining an (EBITDA) of around €2.5 billion for the full year 2014.

AirFrance (AFA) and partner (KLM) Royal Dutch Airlines said they have accepted a firm offer from Germany's Intro Aviation GmbH for the purchase of Cityjet ((IATA) Code: WX, based at Dublin International) and its subsidiary, (VLM) ((IATA) Code: VG, based at Antwerp). (AFA) and CityJet will pursue their commercial co-operation as part of a new industrial plan, which will involve the launch of Cityjet-branded flights from London City to various European destinations. In addition, Cityjet will continue to operate flights on behalf of AirFrance (AFA) out of Paris (CDG).

The closing of the transaction for the CityJet shares should take place in April 2014. Intro Aviation says among its most urgent requirements will be the upgrading of Cityjet's outdated fleet of ARJ-85s and (VLM)'s Fokker F 50s.

May 2014: Brazil’s antitrust regulator has given the green light for AirFrance (AFA) - (KLM) to invest $100 million in its newly extended partnership with Brazilian low-cost carrier (LCC) (GOL) (GOT).

(GOL) (GOT) said it has received “unconditional approval” for its tie-up with (AFA) - (KLM) from the Conselho Administrativo de Defesa Economica (CADE). (AFA) - (KLM) and (GOL) unveiled their plans to form an “exclusive long term strategic partnership” on February 19, including an extension of their existing code share, as well as sales force and maintenance coordination.

Under the agreement, (AFA) - (KLM) will invest $52 million to acquire a 1.5% stake in (GOL). It will also plough a further $48 million into the partnership. The move forms part of (AFA) - (KLM)’s strategy to increase its interests in South America.

Airbus (EDS) and (KLM) Royal Dutch Airlines have completed a 10-hour flight from Amsterdam to Aruba with an A330-200 using sustainable jet fuel, the longest biofuel flight to date by an Airbus (EDS) airplane - - SEE PHOTO - - "KLM-2014-05-A330-200 BIOFUEL FLIGHT."

According to (EDS), the A330 took off with a 20% blend of sustainable fuel made of used cooking oil, for a 10-hour flight from Amsterdam Airport Schiphol to the Dutch Caribbean island of Aruba. The flight was the first of a series of around 20 long-haul commercial flights using an Airbus (EDS) airplane in the context of the European initiative called “Initiative Towards sustainable Kerosene for Aviation” (ITAKA), which aims to speed up the commercialization of aviation biofuels in Europe.

Funded by the European Union (EU), (ITAKA) is a collaborative project aiming to produce sustainable aviation fuel and to test its use in existing systems and normal flight operations in Europe with (KLM). The project will also link supply and demand by establishing relationships among feedstock growers and producers, biofuel producers, distributors and airlines.

(KLM) Royal Dutch Airlines has appointed (CFO), Erik Swelheim to the statutory board. He will retain his current position as (CFO).

AirFrance Industries (AFI) (KLM) (E&M) has expanded its contract with Afriqiyah Airways (AQY) for total care of a third airplane type, its Airbus A330s. It also added a third A319 to its contract with Air Côte d'Ivoire (VRE) for component and engine support, exclusive airplane inspections and engineering plus line maintenance.

June 2014: (KLM) Royal Dutch Airlines has begun 2x-daily to Turin and daily to Bilbao and Zagreb.

AirFrance Industries (AFI) (KLM) (E&M) has received an extended maintenance contract from Surinam Airways (SUR) on an Airbus A340-300 with full airplane maintenance and overhaul to include engineering services, "A" checks, engine and component repair with pool access, and a Main Base Kit.

July 2014: The AirFrance (AFA) - (KLM) Group reported a first-half net loss of -€614 million/-$827 million, narrowed from a net loss of -€799 million reported for the same period in 2013.

The group also narrowed its first-half operating loss to -€207 million, more than halving the -€448 million loss reported for the year-ago period.

(AFA) said its "Transform 2015" plan was on track to achieve cost reduction objectives, but warned the economic environment remained weak as currency fluctuations continued to impact revenues. In addition, overcapacity was hurting yield on key long routes, especially to North America and Asia; cargo recovery remained slower than expected.

(AFA) - (KLM) Chairman & (CEO), Alexandre de Juniac said: “Despite a tough operating environment, the AirFrance - (KLM) Group maintained the momentum of its recovery in the first half of 2014 by halving its operating loss. Quarter after quarter, our results are consistently reflecting the benefits of the productivity measures implemented under Transform 2015.”

Although first-half revenue was down -1.8% to €12 billion, the group said this included €287 million of negative currency impact.

First-half operating costs were reduced -3.6%, with fuel costs down -5.9% and employee costs down -3.6%.

In terms of passenger business, first-half (ASK)s were up +1.2%, while (RPK)s were up +2.5% to 112 billion. Load factor was up +1% point to 83.8 LF.

De Juniac said Transform 2015 would be completed in a few months and had “fully delivered on structural cost reduction leading to a significant improvement in the financial situation.” He said the program would be replaced with a five-year successor plan currently being fleshed out. “While maintaining the imperatives of competitiveness and the ongoing strengthening of the Group’s financial position, the successor plan will also focus on growth,” de Juniac said. “The plan will thus be named "Perform 2020," and we will give a detailed presentation of its main components in September.”

He said Perform 2020 would put long-haul operations at the center of a global network of partners, focus on a strong brand portfolio addressing all customer segments, rationalize short- and medium-haul business, including a strengthened low-cost operation centered on the accelerated development and repositioning of its Transavia (TAV)/(TVF) subsidiary, and a more balanced portfolio of service activities, such as Cargo, Maintenance and Catering.

Looking forward, (AFA) - (KLM) said: “Delivery on the Transform 2015 plan is fully on track. However, the operating environment remains tough. Under these conditions, the 2014 (EBITDA) is expected to be between €2.2 and €2.3 billion. Strong capital discipline will enable the group to remain on track in terms of debt reduction and achieve its objective of €4.5 billion in net debt in 2015.”

In June, (AFA) - (KLM) carried 7.2 million passengers, up +3.9% compared with June 2013. A +1.8% increase in capacity was met by +2.9% traffic growth, pushing its load factor up by a +0.9% point to 86.2% LF. Unit revenues remained stable. However, cargo traffic slipped -4.3%, exceeding a -1.7% capacity reduction, pushing (AFA) - (KLM)’s average cargo load factor down -1.6 points to 60.7% LF.

“While not representing a turning point in market trends, June traffic figures, as well as bookings for July and August, nevertheless reflect the overcapacity on certain long-haul routes (notably North America and Asia) with the attendant impact on yields. This comes on top of the persistently weak cargo demand and the challenging situation in Venezuela identified in the first quarter,” (AFA) - (KLM) said..

In June, (AFA) - (KLM) carried 7.2 million passengers, up +3.9% compared with June 2013. A +1.8% increase in capacity was met by +2.9% traffic growth, pushing its load factor up by a +0.9% point to 86.2% LF. Unit revenues remained stable. However, cargo traffic slipped -4.3%, exceeding a -1.7% capacity reduction, pushing (AFA) - (KLM)’s average cargo load factor down -1.6 points to 60.7% LF.

“While not representing a turning point in market trends, June traffic figures, as well as bookings for July and August, nevertheless reflect the overcapacity on certain long-haul routes (notably North America and Asia) with the attendant impact on yields. This comes on top of the persistently weak cargo demand and the challenging situation in Venezuela identified in the first quarter,” (AFA) - (KLM) said.

Venezuela has been undergoing a period of political and economic uncertainty. According to (IATA), this has led to currency controls that have affected airlines, including Delta Air Lines (DAL), American Airlines (AAL) and AirFrance (AFA).

(AFA) also announced the completion of its ground staff voluntary redundancy scheme, which forms part of its "Transform 2015" restructuring plan. “With 1,772 validated applications, corresponding to 1,660 full-time employees (FTEs), the plan almost reached its objective of 1,826 departures. A plan aimed at 700 (FTE)s among the cabin crew (CA) has just begun,” (AFA) said.

AirFrance Industries (AFI) (KLM) (E&M) has reached an agreement with Virgin Atlantic (VAA) to provide component support services for its new fleet of Boeing 787s that begin service later this year. The contract covers component and (APU) maintenance, along with pool access and the supply of a Main Base Kit holding in London.

August 2014: FOR LATEST KLM UPDATE, PLEASE GO TO MANAGEMENT BELOW AND CHECK OUT - - "KLM-3-PIETER ELBERS - 2014-08-A/B/C/D/E/F/G."

(KLM) Royal Dutch Airlines begins 3x-weekly, Amsterdam - Bogota - Cali Boeing 777-200 service on March 31, 2015.

Barfield, a new AirFrance Industries (AFI)-(KLM) Engineering & Maintenance (AFI KLM E&M) subsidiary, following its recent acquisition from Sabena Technics (SAB), has installed Johann Panier as its (CEO).

(KLM) Royal Dutch Airlines has signed a long-term contract with Air Lease Corporation (ALE), covering a pair of new-build Boeing 777-300ERs. The airplanes are scheduled for delivery in the second half of 2016 and early 2017, and will be sourced from (ALE)'s existing order book.

(ALE) Chairman & (CEO), Steve Udvar-Hazy described (KLM) as a “key and strategic” customer. (KLM) already leases Airbus A330-200, A330-300, Boeing 777-200ER and 737-800 airplanes from (ALe).

The latest deal means (KLM) is now committed to lease a total of four new Boeing 777-300ERs from (ALE). The other pair is scheduled for delivery in early 2015 and early 2016.

September 2014: (KLM) is to discontinue Amsterdam - Harare flights in October.

AirFrance (AFA) - (KLM) Group will phase out five Martinair (MTH) Boeing MD-11F freighters and internally reallocate up to 400 staff, as it strives to hit cargo breakeven by 2017.

AirFrance (AFA) has detailed its new "Perform 2020" strategy, the successor to its "Transform 2015" program, targeting a 10% (EBITDAR) margin by 2017.

"Transform 2015," which aimed to slash -€1 billion/-$1.3 billion from (AFA)’s costs, will come to a close at the end of the year, paving the way for Perform 2020. The new program’s targets are for a return on capital employed (ROCE) to 9 - 11% and hit a net debt/EBITDAR ratio of below <2.5 by 2017, through expansion into growth markets and the restructuring of loss-making divisions.

This will be achieved by expanding its passenger hub, centralizing point-to-point operations under a single business unit, substantially growing its Transavia (TAV) leisure unit, trimming down its dedicated freighter operations and expanding its maintenance business. These initiatives will be coupled with more productivity and cost control efforts.

“By 2020, we will have built an air transport group focused on a leading long-haul network at the heart of global alliances, with a portfolio of unique brands, restructured short- and medium-haul operations, with a reinforced presence in the low cost segment in Europe, leadership positions in cargo, maintenance and catering, and a significantly improved risk profile both operationally and financially,” (AFA) - (KLM)’s Chairman & (CEO), Alexandre de Juniac said.

This will be supported by the reinforcement of strategic partnerships and strict capacity discipline, with just 1% - 1.5% (ASK) growth planned for 2015 - 2017. (AFA) also plans to revamp its products and services, with an announcement expected on September 23.

As expected, its point-to-point network and cost base will be restructured into a single business unit, combining HOP! and (AFA) point-to-point operations, to hit operating breakeven by 2017. The dedicated cargo fleet will also be slimmed from 14 to just five airplanes by the end of 2016 for a return to breakeven by 2017, versus a -€110 million/-$142 million loss in 2013, or a -€200 million loss including belly capacity.

Meanwhile, Transavia (TAV) will open new bases outside France and the Netherlands. “By 2017, (TAV) will rank among the leading low-cost carriers (LCC)s in Europe, operating a fleet of 100 airplanes and carrying more than >20 million passengers. This business should contribute an additional +€100 million of (EBITDAR) in 2017. With profitability being impacted by ongoing ramp-up costs, the group is targeting operating profits by 2018,” said the company. (TAV)’s growth will be financed by the €339 million, raised from the partial sale of (AFA)’s Amadeus shares on September 9.

(AFA)’s maintenance arm is also slated for growth, particularly its engines and components work, with potential acquisitions on the cards. “This business should generate an additional +€50 million to +€80 million of (EBITDAR) in 2017, depending on acquisitions,” the Group said.

There will also be a continued push to shave -1% to -1.5% from its unit costs each year. (AFA) said this will go “beyond traditional efforts” and will include the ongoing restructuring of uncompetitive activities and further staff productivity negotiations.

AirFrance (AFA) - (KLM) plans to grow the fleet of its low-cost (carrier) subsidiary, Transavia (TAV) to 100 airplanes by 2017, the group’s Chairman & (CEO) Alexandre de Juniac stated.

October 2014: News Item A-1: Air France (AFA) - (KLM) reported third-quarter net income of +€100 million/+$127.2 million), down -32.4% from a +€148 million profit in the year-ago period, due to its pilot (FC) strike and overcapacity putting pressure on yields.

Speaking on the group’s third quarter results conference call, (AFA) - (KLM) (CFO), Pierre-François Riolacci said the 14-day pilots (FC)’s walkout had a “massive impact” on the third-quarter results. In total, it reduced revenues by -€416 million and caused a -€330 million hit to the group’s operating profit.

Riolacci also described the wider European market as “lack luster” and “sluggish.” Yields are volatile and coming under increasing pressure due to overcapacity, particularly on South American and Asian routes.

Third-quarter revenue fell -6.7% to €6.7 billion, but excluding the strike effect, remained stable. Operating costs fell -1.4% to €6.5 billion, producing an operating profit of +€247 million, down -61.5% from a +€641 million operating profit in the prior-year quarter.

Traffic fell -3.2% to 61.5 billion (RPK)s on a -4.1% decrease in capacity to 70.1 billion (ASK)s, producing a load factor of 87.7% LF, up +0.8 of a point.

“The strike led to the cancellation of an estimated 4,249 million (ASK)s (18% of September (ASK)s) and 213 million (ATK)s (16% of September (ATK)s) resulting in an equivalent cancellation of 4.75 billion (EASK)s,” (AFA) - (KLM) said in its results statement.

Yield dipped -5.3% to 8.15 cents as (RASK) lowered -4.4% to 7.15 cents and (CASK) increased +2.4% to 6.85 cents. Excluding the strike, (AFA) - (KLM) said its unit costs were down -1.2%, marking its tenth quarter of reductions.

Riolacci said the strike had added another €400 - €500 million to (AFA) - (KLM)’s net debt, which stood at €5.27 billion on September 30, widened from €5.35 billion at the end of 2013. “We can’t pretend nothing happened. There will be strong austerity in our investments. We will be revising down some of our capital expenditure and looking at our asset portfolio and our fleet to adjust it to the yield environment.”

While (AFA) - (KLM has no plans to adjust its current airplane orders, it may terminate or not renew some of its operating leases. “We have to decide how many airplanes we need for our long-haul operations. It is clear that is part of our budget discussions today,” he said.

Further savings will need to come from both (AFA) and (KLM), but Riolacci denied there were internal tensions at the group’s October 28 board meeting and categorically rejected suggestion of harsh cost measures and heavy layoffs. He added that Dutch media reports of the board being in crisis mode are “totally false.”

He declined to comment further on potential measures until discussions with unions have been concluded. Further information, along with an update on the "Perform 2020" plan, will be given at the release of the group’s full-year figures in February.

News Item A-2: (KLM) Royal Dutch Airlines announced that President & (CEO), Camiel Eurlings has resigned. Pieter Elbers succeeded Eurlings, effective immediately. The announcement was unexpected.

Camiel Eurlings became (CEO) on July 1, 2013, following the retirement of Peter Hartmann. Camiel is a former Dutch Transport Minister and a member of the European Parliament. He is also former a (KLM) Managing Director and Executive VP of Air France (AFA) - (KLM) Cargo. He was President & (CEO) of (KLM) for four years.

Camiel Eurlings, whose term was set to expire in April 2015, decided to resign after consultation with (KLM)’s supervisor board, in order to pave the way for his successor, (KLM) said.

Pieter Elbers started his career at (KLM) in 1992 and was most recently (COO) and Deputy (CEO) of (KLM). He has been a member of (KLM)'s statutory board of Managing Directors since April 2012; he is also a member of the Air France (AFA) - (KLM) executive committee.

His previous positions at (KLM) include Senior VP Network & Alliances, General Manager (KLM) Japan & Korea, and General Manager (KLM) Mediterranean. He is also a member of the supervisory boards of Kenya Airways (KEN) and Transavia Airlines (TAV) (Transavia Netherlands).

News Item A-3: Air France (AFA) pilots (FC) have now joined flight attendants (CA) in demanding the right to refuse to fly to destinations in the West African countries affected by Ebola. The move threatens to further isolate the three nations most ravaged by the disease - Guinea, Liberia and Sierra Leone.

According to "Le Monde" publication in Paris, François Hamant, a representative of the pilot (FC)'s union in France, filed an official government complaint. It demands a commitment from (AFA) management that any pilot (FC) or flight attendant (CA) not wanting to fly to the Ebola-impacted West African nations can refuse to make the flight without suffering any adverse consequences, either financial or disciplinary.

Julien Duboz, spokesman for the Syndicat des Pilotes d'AirFrance (AFA), the French union of airline pilots (FC), confirmed to "Le Monde" that while the union is aware of some (AFA) pilots (FC) who have refused to fly to West Africa, the defections are "rare."

As (WND) reported, the World Health Organization (WNO) recently warned that Ebola is "expanding exponentially" in West Africa, with the problem so severe in Liberia, that many thousands of new cases expected in country over the coming three weeks.

Recently, (WHO) reported in Geneva that one in 10 health-care workers treating Ebola patients in West Africa has become infected with the disease.

Nevertheless, (WHO) has repeatedly issued advisories contending airline pilots (FC) and crews are protected by rigorous screening to keep from flights any passenger showing symptoms of Ebola.

(WHO) maintains that while the incubation period for Ebola can be as long as 21 days, those infected with the disease who are not yet displaying symptoms represent no danger of transmitting it.

Duboz explained to Le Monde that (AFA) so far has not had a single incident of a member of the aircrew ((FC) - (CA)) or a passenger becoming infected with Ebola, despite a continuation of regularly scheduled (AFA) flights to West African destinations.

Dr Margaret Chan, the (WHO) Director General, has repeatedly insisted that disruptions in commercial air travel to West Africa will impede the efforts of international health organizations to contain and combat the disease. "We must be careful not to characterize Ebola as 'an African disease,'" Chan said.

She warned that the stigmatization of the disease with any racial classification would be detrimental to the UN effort to control it.
"This is an international issue, a global threat," she continued. "We need to make sure Ebola patients and Ebola-affected countries aren't stigmatized and isolated."

News Item A-4: The European Commission (EC) is seeking input into whether SkyTeam (STM) Alliance members Delta Air Lines (DAL), Air France (AFA) - (KLM) and Alitalia (ALI) have unfair dominance on their transatlantic New York services.

This marks the latest step in a probe that was formally opened by the (EC) in January 2012. The investigation originally looked at whether all SkyTeam (STM) Alliance carriers had transatlantic market dominance, but later dismissed eight other alliance members to focus on just (AFA) - (KLM), Alitalia (ALI), and Delta (DAL). “The three airlines have offered to make landing and takeoff slots available at both ends of the Amsterdam - New York and Rome - New York routes to facilitate the market entry of competitors,” the (EC) said, inviting comments from third parties within a month of publication in the "Official Journal."

(AFA) - (KLM), (ALI) and (DAL) are also willing to allow rivals to sell tickets on their flights, facilitate connections and give access to their frequent flyer program on all three routes. “If the market test confirms that the proposed commitments remedy the competition concerns, the (EC) may make them legally binding on the companies,” the (EC) said.

The (EU) body is concerned that the “extensive cooperation” between (AFA) - (KLM), (ALI), and (DAL), which includes profit-sharing, as well as schedules, pricing and capacity coordination, could be pushing up premium fares between Paris and New York, in addition to premium and non-premium fares on the other two routes.

News Item A-5: Air France Industries (AFI) - (KLM) Engineering & Maintenance, and Bombardier Aerospace (BMB) executives agree there is still some way to go before bonded repairs will be accepted on primary composite structures.

News Item A-6: (KLM) has been the world's last airline still using the three-engine MD-11 "tri-jet" for regular revenue service. But that came to an end Sunday morning, October 26th with (KLM) Flight 672 from Montreal to Amsterdam, (KLM)'s final regularly scheduled flight to be operated on the MD-11. SEE ATTACHED - - "KLM-2014-10 - LAST MD-11 FLIGHT."

Flight 672 (flown by an MD-11 that KLM named "Audrey Hepburn") received a water-cannon salute when it arrived at Amsterdam's Schiphol Airport around 6:35 am local time (about 1:35 am ET).

Since the MD-11 has been out of production for many years, there’s more to the story than simply another fleet turnover/replacement event.

The MD-11 was a derivative of the McDonnell Douglas DC-10, and entered service with Finnair (FIN) in December 1990. It had the same basic layout as its tri-jet predecessor, albeit somewhat larger, and offering a greater capacity. It was acquired by a number of well-known airlines, including American (AAL), Delta (DAL), Alitalia (ALI), (JAL), Swissair (CSR), Garuda (GIA), and (VASP) (VSP), as well as (KLM) and Finnair (FIN).

In addition to its career as a passenger-hauler, the MD-11 went on to have a successful run as a freighter, both for new-build airplanes and conversions from ships delivered originally as passenger airliners. Both USA-based integrators, FedEx (FED) and (UPS), include the type in their fleets, as well as Lufthansa Cargo (LUB), for example. (KLM) is the last passenger operator of the type; approximately 140 MD-11s, all freighters, remain in service, however. (Interestingly, the final DC-10 passenger service, by Biman Bangladesh Airlines (BNG), also took place in 2014, in February).

November 2014: News Item A-1: Air France (AFA) - (KLM) is stepping up its Canadian routes with the addition of two new services to Vancouver and Edmonton. The Vancouver link will be operated by (AFA) from Paris Charles de Gaulle using a Boeing 777-200, configured with 309 seats. The service will start as 3x-weekly on March 29, moving up to 5x-weekly on May 4, before reducing back to 4x-weekly on September 14.

(KLM) will be the operating carrier for the new Edmonton route. “(KLM) will be the first and only airline in continental Europe to connect Europe to the city of Edmonton,” (AFA) - (KLM) said.

(KLM) plans to offer 3x-weekly Airbus A330-200 services from May 5, increasing to 4x-weekly from June 22. “Both these route launches are a strong sign, reflecting the (AFA) - (KLM) Group's commercial offensive and its desire to strengthen its position to and from Canada,” said (AFA) - (KLM) Executive VP Commercial Passenger Business, Patrick Alexandre.

This winter, (AFA) - (KLM) will serve four Canadian destinations: Calgary, Montreal, Toronto, and Vancouver, along with a number of onward destinations through its WestJet (WJI) code share.

News Item A-2: Air France Industries (AFI) (KLM) (E&M) has been selected by Xiamen Air (XIA) to support the launch of its six Boeing 787s with component maintenance and overhaul services under a long-term contract. (XIA) is the seventh significant 787 operator and first Chinese one to choose the Maintenance Repair & Overhaul (MRO) organization for long-term 787 component support.

News Item A-3: (KLM) Royal Dutch Airlines named René de Groot as (COO).

News Item A-4: See video - "Last MD-11 Commercial Flight"

December 2014: News Item A-1: Air France (AFA) - (KLM) has revised downward its 2014 (EBITDA) target by a further -€200 million/-$245 million as its financial position worsens. (AFA) - (KLM) said it is considering further cost-cutting measures and is looking at a “significant scale back” in its investment plan.

The Franco-Dutch company’s board of directors issued the revised profit figure following a recent meeting in which they reviewed an updated financial outlook for fourth quarter of 2014.

The further deterioration in the group’s financial performance is due to a combination of several factors, including the continuing aftereffects of the 14-day Air France (AFA) pilots (FC)’s strike in the fall.

In late October, Air France (AFA) - (KLM) reported the dispute had cost it an estimated -€330 million in operating profit.

Another effect of the strike included higher than anticipated costs for interline invoicing, as Air France (AFA) re-booked passengers stranded by the strike on to other carriers.

Other factors behind the additional €200 million write-down included continuing persistent weakness in revenues in several long-haul markets. Additionally, new fiscal regulations mean the airline group will not recognize in its 2014 (EBITDA) a positive pension cost adjustment that was previously expected.

Although crude oil prices have recently tumbled, it has so far resulted in only a limited effect on fuel prices, due to factors such as the structure of procurement contracts and the group’s fuel hedging portfolio.

The group has previously announced it intends to revise its 2015 and 2016 business plans to take into account the consequences of the pilots (FC)'s strike and of the weaker unit revenue trend that has developed since the summer.

“The Perform 2020 dynamic is under way across all the Group’s activities, based on the imperatives of an ongoing improvement in competitiveness and strict financial discipline,” said (AFA) - (KLM) Chairman & (CEO), Alexandre de Juniac. “By significantly stepping up our cost-cutting efforts and adapting the investment plan, (AFA) - (KLM) can gain the resources and be well prepared to tackle 2015 despite the difficult competitive environment.”

News Item A-2: (KLM) Royal Dutch Airlines has ordered more than >6,000 Recaro CL3710 seats for economy (Y) class. A total of 15 existing Boeing 777-200s will be retrofitted with the CL3710. By retrofitting airplanes with this seat, weight savings up to -1,000 km per airplane can be achieved.

News Item A-3: (KLM) Royal Dutch Airlines and hospitality website Airbnb have announced they will be entering into a long-term partnership.

January 2015: News Item A-1: Qatar Airlines (QTA) & the (IAG): "Shifting sands in the global reach of the Gulf carriers" January 30, 2015 by Karen Walker in (ATW) Editor's Blog:

The announcement that Qatar Airways (QTA) has acquired a 9.99% stake in (BAB)/(IBE) parent company, the International Airlines Group (IAG) is an interesting development in the ongoing change in the international airline landscape prompted by the growth of the Gulf carriers.

(QTA) (CEO), Akbar Al Baker describes the taking of a stake in the (IAG), worth about $1.7 billion, as an “excellent opportunity to further develop our Westward strategy.” (IAG) (CEO), Willie Walsh said he was “delighted” about the investment, and opportunities to work more closely with (QTA).

There’s an interesting history to the (IAG) and (QTA) connection. Al Baker and Walsh are long-time, firm friends who each hold the other in high respect. In October 2013, (QTA) joined the Oneworld (ONW) global alliance, becoming the first of the major Gulf carriers to join a global alliance. British Airways (BAB), a founding (ONW) member, was (QTA)’s sponsor and Walsh spoke very enthusiastically about the importance of having (QTA) join. My understanding is that his enthusiasm was not matched by every (ONW) member (CEO).

Dubai-based Emirates (EAD), meanwhile, remains alliance-independent, but in 2013 it entered a five-year alliance with Qantas (QAN), another Oneworld (ONW) Alliance founding member. And Abu Dhabi-based Etihad Airways (EHD) owns a 29% stake in airberlin (BER), another (ONW) airline. (EHD) has its own version of an alliance, taking stakes in relatively small carriers and creating a constellation of airline equity partners that includes airberlin (BER), Air Serbia (JAT), India’s Jet Airways (JPL), Virgin Australia (VOZ), Air Seychelles (ASY) and Aer Lingus (ARL). Interestingly, the (IAG) wants to buy Aer Lingus (ARL), a move, which if it happens, would further tangle the (IAG)-Oneworld (ONW)-Gulf carrier web.

(EHD), of course, is also now a 49% owner of Alitalia (ALI) (to keep you on track with the alliance matings here, (ALI) is a SkyTeam (STM) Alliance member). But (QTA)’s stake in the (IAG) is the first time that one of the “Big Three” Gulf carriers has invested in one of the “Big Three” European airline groups of the (IAG), the Lufthansa Group and Air France (AFA) - (KLM).

It will be fascinating to see if the (QTA) - (IAG) deal marks the beginning of more such equity partnerships (within the caps of the (EU) airline ownership rules) between Gulf carriers and their European counterparts. The fact is that it’s becoming increasingly challenging for the “traditional” global hubs of Amsterdam, Frankfurt, Heathrow, and Paris to compete with the “modern” world hubs of Abu Dhabi, Dubai, and Qatar.

In the USA, meanwhile, there is growing awareness that what happened in Europe regards Gulf competition could happen in America. A campaign is being run by North America’s “Big Three” (American Airlines (AAL), Delta Air Lines (DAL) and United Airlines (UAL)) to try and get lawmakers to review "Open Skies" policies and the international air transport competitive landscape to take account of the rise of the Gulf carriers.

Flying under the radar so far in the shifting sands of air transport power houses is Turkish Airlines (THY), which is a Star (SAL) Alliance carrier and which has developed an extensive network, very large and modern fleet and highly successful global hub in Istanbul. It will be interesting to see whether that continues to be the case if, as Al Baker described it, a “Westward strategy” by Gulf carriers begins, in some eyes at least, to look more like a "Westward" invasion.

News Item A-2: Air France (AFA) has detailed plans for a further -800 voluntary layoffs. It is also considering delaying its Boeing 777 deliveries and has sold half its 4.4% stake in Amadeus.

While "Transform 2015" and lower fuel prices will deliver some benefits in 2015, a weaker unit revenue trend since the summer of 2014 has prompted the additional cuts.

(AFA) said the voluntary redundancy plan will affect “approximately 800” ground staff and cabin crew (CA). This will be coupled with “wage moderation and productivity efforts.”

Further information is expected at the release of Air France (AFA) - (KLM)’s full-year results on February 19.

The cuts also include a “downwards revision in fleet and capacity growth.” The (AFA) - (KLM) Group is still due to take delivery of five Boeing 777s in 2015, three for (AFA) and two for (KLM), but its deliveries from 2016 onward could be delayed.

“Nothing has been confirmed,” the (AFA) spokeswoman said. “The group may postpone some of its deliveries from 2016, but we don’t have any further information or details to give.”

Finally, (AFA) - (KLM) has raised +€327 million/+$378 million by selling half of its 4.4% stake in Information Technology (IT) firm Amadeus. The other 2.2% is being held by the Deutsche Bank under a hedging transaction which was sealed last November, although Air France (AFA) still owns these shares.

February 2015: News Item A-1: Air France (AFA) - (KLM) reported a full-year net loss of -€198 million/-$225.5 million, a marked improvement on a -€1.2 billion net loss for 2013, boosted by the completion of "Transform 2015."

“The full year 2014 results speak for themselves: Despite the challenging economic and competitive context, once corrected for the impact of the Air France (AFA) pilot (FC) strike, (EBITDA) is up by more than >50% in three years,” (AFA) - (KLM), Chairman & (CEO), Alexandre de Juniac said.

However, the group’s operating results were depressed by the sluggish economic environment, a €425 million hit from the 14-day Air France (AFA) strike last September and negative foreign exchange effects. Long-haul routes were also affected by overcapacity in the second half of the year.

This caused revenue to drop -2.4% to €24.9 billion, producing an operating loss of -€129 million, a sharp deterioration from the +€130 million operating profit it posted in 2013. On a like-for-like basis excluding the impact of the strike, (AFA) - (KLM), (CFO), Pierre-Francois Riolacci said the group had achieved a “strong reduction” in losses, with the group’s operating profit more than doubling to +€296 million.

Turning to individual airlines, (AFA)’s revenues were down -3.4% at €15.6 billion and operating losses nearly doubled to €314 million. However, excluding the strike, revenues were down just -0.4% at €16.1 billion. (AFA) would have delivered a +€99 million operating profit, compared with a -€174 million operating loss last year.

(KLM) generated €9.6 billion in revenues, -0.5% down on 2013, or +0.7% up on a like-for-like basis. Its operating profit dropped to €175 million, down from €301 million in 2013. The majority of (KLM)’s sales are outside the Netherlands, and (KLM) President & (CEO), Pieter Elbers said euro exchange rates had a “significant impact” on the (KLM)’s results.

“Air France (AFA) has achieved significant a cost savings improvement over the last three years. (KLM) also achieved a lot in the first two years, but this has flattened out. The revenue environment is volatile, so we need to have all our focus on our unit costs,” Elbers said.

Group traffic rose +0.5% to 229.3 billion (RPK)s on a -0.6% decrease in capacity to 270.8 billion (ASK)s, producing a load factor of 84.7% LF, up +0.9 point. Yield dipped -3.1% to 8.15 cents as (RASK) lowered -2% to 6.9 euro cents and (CASK) decreased -0.7% to 6.93 euro cents.

News Item A-3: Air France (AFA) - (KLM) will delay the arrival of up to 12 airplanes, as it seeks to slash -€600 million/-$683 million from its capital expenditure plan for the next two years.

See video - - "KLM-747 Landing at St Maarten" - -

March 2015: (KLM) Royal Dutch Airlines has postponed the delivery of two of its Boeing 787-9s, together with a batch of new routes. The delivery delays have been caused by the need to save cash, while the route deferrals are the result of an ongoing dispute with cabin crew unions.

(KLM) said last month it planned to defer deliveries of 10 - 12 airplanes in order to cut -€600 million/-$683 million from its capital expenditure plan over the next two years, but at that time declined to say which airplanes would be affected.

(KLM) has 10 787-9s on order and the first is due to be delivered in October this year, as scheduled, a (KLM) spokeswoman said. However, two of the batch will now be deferred. She declined to say which of the 10 will be affected, or for how long.

(KLM) is due to start an Amsterdam - Edmonton service May 5, but this will be delayed by two weeks, the spokeswoman said. Several other destinations due to be launched shortly after that date (to Bangkok, Rio de Janeiro, Nairobi, Toronto, Xiamen, Hangzhou, Shanghai and Chengdu) will also be delayed by an unspecified period.

The delays are the result of ongoing negotiations with the cabin crew union over a new collective labor agreement.

Negotiations were ongoing, she said, but “if we haven’t made a settlement with the unions, perhaps more measures may have to be taken.” Passengers booked on to the planned new routes would be rebooked onto other flights, she said.

April 2015: News Item A-1: Air France (AFA) - (KLM) has recorded another heavy deficit for the first quarter, with a restated net loss of -€504 million/-$547 million, compared to a figure of -€485 million a year ago. Revenues were up marginally at €5.7 billion, compared to €5.6 billion last time.

The figures were restated after the Franco-Dutch group reclassified its former CityJet subsidiary (divested in May last year) as a discontinued operation.

Breaking down the results, Air France (AFA) recorded a -2.1% increase in revenues to €3.63 billion and an operating loss of -€233 million, +€46 million better than a year ago.

(KLM)’s first-quarter revenue rose +1.3% to €2.1 billion, while its operating loss was -€183 million, -€9 worse than a year ago. (KLM)’s operating result was affected by a non-cash increase of +€31 million in pension-related expenses.

The group’s operating costs were +1.2% higher year-on-year. Excluding fuel, they increased +3.3%. The group’s fuel bill was €1.48 billion, down -4.7% on the back of a -20.3% reduction in jet fuel price after hedging and of a -15.6% negative currency impact.

The group said it had maintained strict capacity discipline, with just a +0.1% rise in total passenger network capacity compared to the previous year.

On its long-haul network, it reported good performance in the North America, Caribbean and Indian Ocean markets, but weaker performance in Latin America on the back of weak economic environments in several key markets. Capacity-demand balances put pressures on both east Africa and Asia networks.

“As planned, short- and medium-haul, point-to-point capacity (excluding the Paris and Amsterdam hubs) was further reduced by -11.8%, leading to a significant improvement in unit revenue of +9.6% like-for-like, whereas for hub-related short- and medium-haul traffic, unit revenues were down -1.4% like-for-like,” according to a quarterly statement.

(AFA) - (KLM) noted that first-quarter capacity at its Transavia (TAV) leisure arm was up +5.1%, reflecting its accelerated development in France (where capacity was up +48%), although this was partly offset by seasonal capacity adjustments in the Netherlands. Traffic rose +7.1%. (TAV)’s load factor remained high at 87.9% LF, up +1.7% despite the increase in capacity.

The group said Transavia (TAV)’s development would accelerate in 2015, with a +30% capacity increase to serve 44 destinations from France. The subsidiary was also launching a new brand identity, new website, and had recently ordered 20 Boeing 737s.

Looking ahead, as well as initiatives under its "Perform 2020" program, negotiations with unions on labor productivity are ongoing.

Air France (AFA) - (KLM) and Air France (AFA) also signed a €1.1 billion revolving credit facility with 13 international banks, finalizing the early refinancing of the Air France (AFA) credit facility that was due to mature in April 2016.

This new credit facility comprises two €550 million tranches with respective three- and five-year maturities.

News Item A-2: (KLM) has resumed flights from Amsterdam (AMS) to Cali (CLO) via Bogota in Colombia. Flights on the 9,114 km sector re-started on March 31st after a 20-year hiatus, and will operate 3x-weekly on Tuesdays, Thursdays and Saturdays, using (KLM)’s 318-seat 777-200s. No other airline serves these two sectors.

News Item A-3: Air France Industries (AFI) (KLM) (E&M) has been providing support for Air Madagascar (MAD)’s two Airbus A340-300s since September 2012, and (MAD) has renewed its Total Care agreement with the Maintenance Repair & Overhaul (MRO). Also, Royal Air Maroc (RAM) has signed a Boeing 787 Component Support agreement with the (MRO), extending an earlier contract for component support of 30 737NGs.

News Item A-4: Air France Industries (AFI) - (KLM) (E&M) will continue to deliver engine support services for the (CF6-80C2)s on National Air Cargo (MUA)’s two Boeing 747-400BCFs. In addition to carrying out shop visits, the services provided will include provision of spare engines during maintenance operations.

News Item A-5: (KLM) has taken delivery of its 24th Boeing 777-300 at Amsterdam Airport Schiphol from Seattle.

News Item A-6: See attached "KLM-2015-04 - TOP 25 WORLD TRAFFIC.jpg."

News Item A-7: See video - - "KLM-S Newest 777-300" - -

May 2015: News Item A-1: (KLM) Royal Dutch Airlines will fly 5x-weekly, Amsterdam Schiphol - Dallas/Fort Worth, A330-200 service May 8 - October 24.

(KLM) expanded its European network with the addition of three new routes from its Amsterdam (AMS) base on May 18th, all of which are operated daily. The SkyTeam (STM) Alliance member now links the Dutch city to Belfast City (BHD), Krakow (KRK), and Montpellier (MPL), three airport pairs that are not served by any other carrier. While the sector to the UK will be operated by (KLM)’s 80-seat Fokker F 70s, (KLM) will use a mixed fleet of its 80Y-seat Fokker F 70s and 100-seat E190s on the routes to Poland and France.

(KLM) introduced its fifth route to Canada, with the addition of thrice-weekly flights (Tuesdays, Thursdays and Sundays) from Amsterdam (AMS) to Edmonton (YEG) on May 19. The 6,951 km sector to the capital of the Canadian province of Alberta will see a frequency increase to four times weekly from June 26 and will face no direct competition from any other carrier. The SkyTeam (STM) Alliance member will fly its 243-seat A330-200s on the new airport pair. (KLM) is also serving the Canadian market with services to Montreal (daily), Calgary (daily), Vancouver (daily) and Toronto Pearson (12 times weekly). Edmonton Airport’s only other transatlantic services this summer are with Air Canada (ACN) to London Heathrow (thrice-weekly) and Icelandair (ICE) to Keflavik/Reykjavik, which is operated six times weekly.

News Item A-2: Alitalia is to end its Air France (AFA) - (KLM) partnership in 2017.

Etihad Airways (EHD) equity partner, Alitalia (ALI) will not renew its long-standing agreements with Air France (AFA) - (KLM), when they come up for renewal in January 2017, saying the relationship is imbalanced.

The (AFA) - (KLM)/Alitalia (ALI) tie-up covers passenger services between France, Italy, the Netherlands and beyond (as well as the marketing, sales and distribution of (ALI)’s belly capacity, currently performed by (AFA) - (KLM).

(ALI) said the (AFA) - (KLM) partnership and ancillary joint venture (JV) agreements were signed “under very different economic circumstances” in 2009 and 2010, before being transferred to the new (ALI) in January 2015. As part of this transition, Etihad Airways (EHD) took a 49% stake in Alitalia (ALI). (AFA) used to be a key (ALI) shareholder, but now holds less than <1% of (ALI).

“These agreements are no longer beneficial, either commercially or strategically, to the new (ALI) and its ambitious turnaround plan. They were negotiated when (ALI) was in a very different position, with the result that the agreements in their current forms favor the other party,” (ALI) (CEO), Silvano Cassano said.

He added the agreements are “undermining” (ALI)’s efforts to restructure its network, aimed at winning back traffic and supporting the Italian manufacturing industry’s cargo needs.

As part of its reinvention, (ALI) has joined (EHD)’s network of equity partners that includes airberlin (BER), Air Serbia (JAT), Air Seychelles (ASY), Etihad Airways (EHD), Etihad Regional operated by Darwin Airline, Jet Airways (JPL), and NIKI (NKI).

“We have indicated to (AFA) - (KLM) that we are willing to discuss more equitable arrangements that benefit all the parties involved, but thus far, we have been unable to achieve this result. We remain open to further discussions to achieve a mutually acceptable solution. However, in the interest of transparency, and certainty for all parties, we felt it necessary to announce our intention not to renew these agreements under the present conditions,” he said.

It is unclear what, if any, implications this announcement has for (ALI)’s SkyTeam (STM) Alliance membership and its transatlantic joint venture (JV) with Air France (AFA) - (KLM) and Delta Air Lines (DAL).

An (AFA) - (KLM) spokesperson said in an emailed statement: “(AFA) - (KLM) is currently holding discussions with (ALI) to see how they can cooperate in the future in Europe. The agreements under the European (JV) between (AFA) - (KLM) and (ALI) still applies until January 2017.”

News Item A-3: The French government has increased its shareholding in Air France (AFA) - (KLM) in a move that will increase its influence at the Franco - Dutch company.

It will pay €33.2 million to €45.9 million/$37.4 to $51.6 million for up to 5.1 million shares. This represents 1.7% of the company’s capital and raises the government’s stake to 17.58%.

The government said it was making the purchase to ‘’support the adoption of double voting rights’’ by shareholders at the upcoming annual general shareholders’ meeting on May 21.

The introduction of double voting rights would give the French state, as a longstanding shareholder, increased power over the company.

State-owned companies in France, together with more than half the companies in the (CAC) 40 index of leading French enterprises, offer shareholders double voting rights if they hold their shares for more than two years. This is intended to be a reward for long-term involvement in the companies.

Air France - (KLM)’s board of directors has decided to put the introduction of double voting rights to a shareholders’ vote at the May 21 meeting. The board is actually putting forward a resolution to maintain single voting rights, but wants “to leave this to shareholder democracy.

“During its meeting of April 29th, the board considered that a stable, long-term shareholder base is beneficial for a company like Air France - (KLM), whose return to profitability and to a growth phase are also part of a long-term strategy,” the airline said.

Announcing the share purchase, France’s Ministry of Economy, Finances & Industry said it “desired to provide the means to support the adoption of double voting rights by Air France (AFA) - (KLM).”

July 2015: News Item A-1: Air France (AFA) - (KLM) reported a first-half net loss of -€638 million/-$700.3 million, widened from a loss of -€619 million in the year-ago period. The Franco-Dutch group said “exceptional volatility” in fuel process and currency exchange fluctuations, plus pressure on unit revenues, led to the increased losses.

Revenue in the first half rose +2.4% to €12.3 billion, while passenger numbers were up +1% at 42.6 million.

(ASK)s rose a slim +0.3% year-over-year due to strict capacity discipline in the first half, while (RPK)s increased by the same amount. Plans to grow capacity +2.3% over the winter 2015 - 2016 period have been reduced to 0.3%.

Load factor for the half-year was unchanged at 83.8% LF.

(AFA) - (KLM) plans to accelerate its "Perform 2020" initiative, with new negotiations imminent with (AFA)’s trade unions to help turn around the Group’s figures.

Group Chairman, Alexandre de Juniac said in the first half the Group’s results were “characterized by exceptional volatility in exchange rates and fuel prices, and by ongoing pressure on unit revenues.”

He added: “The lack of results improvement, leads us to implement immediate additional adaptation measures including, in particular, the closure of heavily loss-making routes, the downward revision in capacity for the forthcoming winter season, together with acceleration and an increase in the magnitude of our cost-saving initiatives.”

De Juniac said that following the agreement signed by (KLM) with its unions, “the rapid conclusion of the negotiations with the (AFA) unions is key to re-launching the results turnaround.”

(CFO), Pierre-François Riolacci said that (while results on North American routes remains bullish and Europe is stable) services to Brazil have suffered as a result of that nation’s “very sluggish” economy, while recent terrorist incidents in Europe and North Africa has had a dramatic effect on traffic between Japan and Europe, which dropped by up to -20% year-over-year.

On the brighter side, he said, the Ebola crisis in Africa is no longer a problem.

Foreign exchange factors (notably, the strengthening of the dollar against the euro (has been a “very significant factor_,” given that some 40% of the Group’s costs were denominated in US currency.

Among moves to cut costs, the three constituent companies of Air France (AFA)’s HOP! regional subsidiary (Airlinair, Brit Air and Régional), which have been run as separate entities under the same brand but with their own air operator’s certificates (AOC)s) will be brought together in a single company with -245 redundancies.

(AFA) - (KLM) is calling for stronger support from European governments to help it weather the squalls, said de Juniac, notably in a reduction of regulatory constraints that impose additional costs for European airlines.

He also wants the European Commission (EC) to “negotiate a balanced agreement with the Gulf countries” on air services and said he would favor some form of international arbitration mechanism to address matters such as “unfair competition and subsidies.”

News Item A-2: "Air France (AFA) to Extend Cuts in Seats, Routes After Profit Plunges" By Andrea Rothman, Bloomberg News, July 24, 2015.

The Air France (AFA) - (KLM) Group will drop routes, curb winter-season seating capacity and deepen other cost-cutting measures after second-quarter profit fell -22%.

Operating profit tumbled to +EUR185 million/+US$203 million, hurt by a continuing slide in fares and a stronger dollar that raised fuel prices, (AFA) - (KLM) said. Margins on that basis also shrank, sliding -0.9% point to 2.8%.

Europe's biggest airline group posted net losses in the last four years under pressure from Persian Gulf carriers on international flights and discounters such as EasyJet (EZY) on shorter routes. Management also has struggled to win over (AFA) pilot unions on its savings plans.

"The rapid conclusion of the negotiations with the (AFA) unions is key to re-launching the results turnaround," (CEO), Alexandre de Juniac said.

(AFA)-(KLM) will trim available seating in the second half to meet lower demand, with capacity cuts of -14% to Japan, 5% to Brazil and 6% to East Africa. It also plans to reduce spending by another 300 million euros by 2017.

(AFA) didn't specify which routes will be affected, or elaborate on where other cuts might come beyond saying it plans "an acceleration and an increase in the magnitude of our cost-saving initiatives."

Revenue for each seat flown a km, an airline-industry benchmark, fell -4.8% on a like-for-like basis, (AFA)-(KLM) said. Fares on long-haul routes were hurt by travel-budget reductions at oil- and gas-related customers, especially in Africa.

The airline maintained its 2015 targets for unit cost improvement in a range of 1% to 1.3% and for net debt of about 4.4 billion euros by year-end.

News Item A-3: Air France (AFA) - (KLM)'s Dutch arm will announce new restructuring measures in September, as it seeks to accelerate its -EUR700 million/-US$772 million cost-savings program, said its (CEO), Pieter Elbers, on July 9.

In an interview with "The Wall Street Journal," Mr Elbers said it would be "a logical approach" to achieve the cost-savings target in 2018, two years earlier than previously planned. "We will come forward with fresh initiatives and sort of reinvent (KLM)," he said.

He made his remarks a day after (KLM) had reached a deal with its Dutch pilots (FC) union. The labor agreement represents an important step in (KLM)'s latest turnaround plan, but "this is not the end station," Mr Elbers said.

(KLM) last year outlined a -EUR700 million cost-savings plan, but (KLM) is accelerating its cost-cutting efforts amid stiffer-than-expected competition.

Air France (AFA) - (KLM) faces fierce competition on intra-European flights from budget airlines and on its long-haul flights from Middle East carriers. It recently said it would scale back flights during the coming winter season in an effort to trim costs.

Meanwhile, (AFA) - (KLM)'s French wing is trying to achieve its own cost-reduction targets.

News Item A-4: (KLM) Royal Dutch Airlines has finalized a €575 million/$635 million revolving credit facility, taking Air France (AFA) - (KLM)’s total undrawn credit to €1.845 billion.

(KLM)’s former facility was not due to mature until July 2016, but it opted for early refinancing with the deal.

(KLM)’s new credit line, which it claims has “improved terms,” will run for five years and involves 10 international banks. “The transaction was launched at €500 million and (KLM) took advantage of the over-subscription to increase the facility to €575 million,” (KLM) said.

Air France (AFA) also opted for an early renewal of its credit facilities, which it finalized at the end of April.

News Item A-5: After “lengthy and intense negotiations,” (KLM) Royal Dutch Airlines has inked an agreement in principle covering a new three-year labor deal with pilots (FC) union, Vereniging Nederlandse Verkeersvliegers (VNV).

(KLM) said the agreement will deliver +4% productivity gains and will “contribute significantly” toward Air France (AFA) - (KLM)’s "Perform 2020" objectives. The new terms, which will be backdated to January 1 and run until December 31, 2017, will now be voted on by (VNV)’s members. “This agreement represents a significant leg of the journey towards creating a more competitive and healthy (KLM),” (KLM) President & (CEO), Pieter Elbers said.

Under the labor pact, (KLM) has committed to no compulsory redundancies on economic grounds, using flexible working to cover demand fluctuations. “The parties will enter into consultations if these instruments prove to be inadequate,” (KLM) said.

Pilot (FC) retirement age will be raised in four steps from 56 to 58 by 2019 and all cockpit crew (FC) will be given 35 days’ leave, compared with 34 to 38 days under the current system. The number of public holidays allowed under the existing collective labor agreement (CLA) will also be halved from six to three.

There are also a number of operational tweaks, such as changes to working patterns and increases to the pilots (FC)’s monthly and annual flight-hour cap. Cape Town, Seoul, and Kuala Lumpur will become three-pilot (FC) operations, compared with the current four-person crew.

As compensation for the productivity gains and pension concessions, the pilots (FC) will be given a one-off share package and the current profit-sharing scheme will be upgraded.

News Item A-6: (KLM) Royal Dutch Airlines is preparing to roll out on board Wi-Fi and revamped interiors with the delivery of its first Boeing 787-9 in October.

(KLM) has 10 787-9s on order, two of which were slated for deferral as part of (KLM)’s cost-saving efforts.

(AFA) - (KLM) and Panasonic Avionics launched an in-flight connectivity trial in 2013 using a single Boeing 777-300 at each airline. (KLM) announced a wider Wi-Fi roll-out with the arrival of its 787s. “This marks the launch of (KLM) Wi-Fi.”

The 787-9s will also be equipped with lie-flat World Business Class (WBC) seats with 16-inch screens and direct-aisle access. Meanwhile, the 787’s economy (Y) seats will recline +40% further than older models and will have an 11-inch screen, plus power socket access.

“The 787 is part of (KLM)’s program of fleet investment, which began with the introduction of the new "World Business (C) Class" in the Boeing 747. This was followed by entirely new, World Business (C) Class and Economy (Y) Class interiors in the Boeing 777-200 and the phased introduction of new 777-300s. From December 2015, (KLM) will continue its fleet renewal with the deployment of the Embraer EMB-175 and EMB-190,” (KLM) said.

News Item A-7: Air France (AFA) - (KLM) appointed Adeline Challon-Kemoun as Executive VP Marketing, Digital & Communication. (AFA) - (KLM) has appointed Nina Jonsson as Senior VP Fleet Management, replacing Bruno Delile who has moved to another position within the group. (AFA) - (KLM) has appointed Nina Jonsson as Senior VP Fleet Management, replacing Bruno Delile who has moved to another position within the group. Jonsson has previously held the positions of United Airlines (UAL) Director Fleet Planning and US Airways (AMW)/(USA) Director Fleet Management.

News Item A-8: Xiamen Airlines (XIA) has committed to purchase another 4 Boeing 787 Dreamliners from Boeing (TBC), to further expand its long-range fleet, the "Xiamen Daily" reported on July 15.

(XIA) will launch its first ever European service to Amsterdam on July 26, using 236-seat 787-8 Dreamliners. Meanwhile, it is scheduled to deploy the 787 Dreamliners on a new Xiamen - Tokyo route starting August 6 and is planning to fly nonstop flights to Australia. (XIA) is expected to operate 50 regional and international routes by the end of this year, boosting its global network.

With the entry of the global long-haul market, (XIA) wants more long-range jets. Since its first Drealiner joined in August 2013, (XIA) has taken delivery of five of six 787s it has on order.

(XIA) has decided to purchase another four 787 Dreamliners, with talks to acquire +10 more 787s, according to a source familiar with the matter.

Besides, (XIA) has signed a wide-ranging code share agreement with its Skyteam (STM) Alliance partner, (KLM), allowing it to expand its coverage in Europe.

(XIA) will code share on this route, and passengers from Xiamen will have the opportunity to connect to a range of European destinations with (KLM), via Amsterdam. Destinations covered by the agreement include London, Manchester, Rome, Venice, Florence, Madrid, Barcelona, Copenhagen, Zurich, Brussels, Stockholm, and Vienna.

In return, (KLM) will code share on a series of (XIA)-operated flights in China, connecting Xiamen with Beijing, Guangzhou, Hangzhou, Nanjing, Wuhan, Qingdao, Chongqing, Kunming, Changsha, Shenzhen, Zhengzhou, and Ningbo.

News Item A-9: Air France (AFA) - (KLM) plans to expand its low-cost carrier (LCC), Transavia (TAV) beyond its French and Dutch bases, despite a bitter industrial dispute last fall.

News Item A-10: See video of 777 landing in windy Schipol - -
http://www.aviationcv.com/aviation-blog/2015/boeing-777-lands-in-windstorm?utm_source=newsletter&utm_medium=email&utm_term=2015-11-15&utm_campaign=Take+a+look+at+JetPack+Flying+Around+the+Statue+of+Liberty+Delta+A330-300+Takeoff+and+More

August 2015: News Item A-1: Mixed aftermarket business results are encouraging some major players to continue to steer clear of Air France Industries (AFI) - (KLM) Group, which padded its Maintenance Repair & Overhaul (MRO) backlog to nearly five years of work and is on track to boost year-over-year operating profit of its (AFI) - (KLM) (E&M) Engineering unit for the fifth consecutive year.

News Item A-2: (KLM) Royal Dutch Airlines has switched an order for six Boeing 787-9s to the larger 787-10 to better fit with its network plans.

The Dutch carrier has 10 787s on order, which were originally destined to be 787-9s, with the first airplane slated to arrive in October.

However, in a brief statement issued August 19, (KLM) said: “(KLM) has changed its order for six Boeing 787-9’s to the larger 787-10 because of the network. It is not an additional order, and the airplanes are expected as of 2020.”

(KLM) is planning to roll out Wi-Fi and revamped interiors with the delivery of its first Boeing 787-9.

September 2015: News Item A-1: Technology specialist (WIN) is expanding its e-booking system to connect independent forwarders to 16 airlines. (WIN) already connects to over 90 airlines for electronic Air Waybill (e-AWB). The carriers available for e-bookings include British Airways (BAB), Iberia (IBE), Etihad Airways (EHD), (SAS), Singapore Airlines (SIA), Jet Airways (JPL), Swiss (CSR), American Airlines (AAL), Air France (AFA), Finnair (FIN), Korean Air (KAL), (KLM),

Lufthansa (DLH), United Airlines (UAL), Emirates (EAD), and Gulf Air (GUL). The all-in-one tool includes the ability for customers to look up flight schedules, create and manage bookings in real-time, transmit (e-AWB) data, and receive full (e-AWB) tracking automatically.

October 2015: News Item A-1: "Air France - (KLM) Posts Sharp 3Q Net Profit Increase" by (ATW) Victoria Moores, October 29, 2015.

The Air France (AFA) - (KLM) Group has reported a third-quarter net income of +€480 million/+$529.6 million, up from +€86 million in the year-ago period, due to strong summer trading.

“A favorable environment, principally characterized by lower fuel prices and strong demand over the summer, resulted in an improvement of (AFA) - (KLM)’s results during the third quarter and first nine months of 2015. Such circumstances came in addition to the positive effects of the "Transform 2015" plan implemented since 2012,” (AFA) - (KLM) (CEO), Alexandre de Juniac said at the release of the results on October 29.

However, de Juniac cautioned this is “not sufficient” to make the group competitive or to support the group’s growth plans, stressing that further unit cost reductions must be achieved under "Perform 2020."

Revenues for the three-month period rose to €7.4 billion, up +10.8% on the prior-year period. However, this figure was boosted by “a strong currency tailwind” and the increase was narrowed to +4.2% excluding the impact of Air France (AFA)’s September 2014 pilots (FC)’s strike, or 2.4% at constant exchange rates and including the strike. The group’s operating profit rose to +€898 million, marking a +€321 million increase, excluding the strike, or +€304 million on a like-for-like basis.

“The third-quarter comparison basis is strongly affected by the (AFA) pilot (FC) strike that disrupted operations in September 2014,” (AFA) - (KLM) said, adding it took a -€416 million revenue hit from the action, partly offset by a +€86 million net-cost saving. “The net impact on third-quarter operating result was thus estimated at €330 million. As a reminder, this strike also had an impact on fourth quarter 2014 revenues, for an estimated €95 million impact on revenues and operating result,” it said.

Operating costs were +1.1% higher year-on-year, or down -7% on a like-for-like basis. Ex-fuel rose +2.7%, or +0.5%, on a constant basis. Unit costs fell -0.9%, removing the effects of currency fluctuations, changes in fuel price and excluding exceptional pension-related costs.

For the full year, the group is now expecting to post a -0.5 to -0.7% unit cost reduction, down from its earlier forecast of -1% to -1.3%.

De Juniac stressed the importance of sealing a new labor agreement with the airline’s pilots (FC) and cabin crew (CA), which he said is “crucial” to the success of "Perform 2020."

News Item A-2: Delta Air Lines (DAL) is buying six slot pairs at slot-constrained, London Heathrow (LHR) Airport from joint venture (JV) partner, Air France (AFA) - (KLM), (DAL)’s executives said on October 14.

News Item A-3: "Air France to cut 14 long-haul airplanes and 2,900 Staff" by (ATW) Victoria Moores, October 5, 2015.

Air France (AFA) is to axe -2,900 jobs, scale back its long-haul fleet by 14 airplanes and close five routes after failing to reach a productivity agreement with its flight crew (FC) unions.

Under the plan, (AFA)'s long-haul fleet will be reduced from 107 airplanes in summer 2015 to 93 in summer 2017, cutting capital expenditure by up to €200 million/$224.2 million in 2016 and 2017. “This adjustment will mainly be made via the accelerated retirement of Airbus A340s, which will not be replaced by Boeing 787s, as had been initially planned,” (AFA) - (KLM) said in an update released on October 5.

This translates into a 10% long-haul capacity reduction between 2015 and 2017, involving the closure of five routes and 35 weekly frequencies. At group level, this translates into a -2% passenger capacity cut by 2017, compared with original plans for +3% growth.

“The schedule modifications will focus on routes where losses are highest, serving principally Asia and the Middle East. The impact on the commercial footprint of the group will be minimal thanks to, among other, the numerous partnerships in the relevant markets,” it said.

This will leave (AFA) overstaffed by approximately +300 pilots (FC), +900 cabin crew (CA) and +1,700 ground staff (MT). “In segments where consultation/negotiations enable the achievement of the "Perform 2020" targets, the adaptation in staff will take the form of voluntary departures. In the other segments, compulsory redundancies cannot be ruled out. The restructuring charges will be recorded once the pace and conditions for these departures has been determined,” (AFA) said.

The announcement followed a Perform 2020 update meeting between its Central Works Council and Air France Chairman & (CEO), Frédéric Gagey.

“We regret that no agreement has been reached with the (AFA) flight crew (FC) unions. The turnaround of the company can only be fulfilled with the mobilization of all its employees. The (AFA) management remains available to reopen negotiations with its unions at any point. We reaffirm our determination to implement the adaptation measures vital to ensuring the long-term future of (AFA) and allow it to finance its growth,” (AFA) - (KLM) Chairman & (CEO), Alexandre de Juniac said.

Despite the measures, (AFA) - (KLM) is maintaining its outlook for its current financial year and for 2017, including a -1.5% reduction in unit costs by 2017.

November 2015: News Item A-1: (KLM) suspends 3x-weekly, Fukuoka Boeing 777-200 service from January 2016.

News Item A-2: Air France Industries (AFI) - (KLM) (E&M) opened a Logistics Center in Dubai in the Jebel Ali Free Zone near the new Dubai World Central.

And Gulf Air (GUL) has extended its agreement for maintenance of (APU)s equipping six Airbus A330s with the Maintenance Repair & Overhaul (MRO). Services will be provided by (EPCOR), the (AFI) - (KLM) (E&M) subsidiary specializing in (APU)s.

In addition, Etihad Airways (EHD) has expanded its strategic cooperation with (AFI) - (KLM) (E&M) through a several-hundred-million-dollar component maintenance agreement for 33 Boeing 777s. The 10-year deal provides (EHD) and its equity partners with access to a global pool of components. (AFI) - (KLM) (E&M) and Saudia Aerospace Engineering Industries (SAU) are entering a long-term strategic partnership. (AFI) - (KLM) (E&M) will support 777 and 787 components under power-by hour and assist (SAEI) (SAU) to develop (MRO) capabilities for Airbus (EDS) and Boeing (TBC) models in Jeddah. Finally, the (MRO) will partner with software firm, Ramco Systems to set up an innovation center in Singapore.

News Item A-3: "Boeing (TBC), (KLM) Royal Dutch Airlines Celebrate Delivery of Airline’s First 787 Dreamliner" by www.aviationnews.eu Rob Vogelaar, November 14, 2015.

Everett, Washington, USA, November 14, 2015 /PRNewswire/: — Boeing (TBC) and (KLM) Royal Dutch Airlines are celebrating the delivery of (KLM)’s first 787-9 Dreamliners (36113, PH-BHA; 38760, PH-HBC). Over the coming years, the 787 will play a key role in (KLM), the Dutch flag carrier’s fleet renewal and expansion. (KLM) acquired these airplanes through leasing company AerCap (DEA).

“We are very proud to welcome our first Boeing 787 Dreamliner,” said Pieter Elbers, (KLM) President & (CEO). “This airplane symbolizes a new phase in the future of (KLM). Investment in our customers is one of our priorities. This efficient airplane is part of that investment. It’s testimony to the great work of 33,000 (KLM) employees, who are committed to giving their best for our customers every day.”

In addition to this delivery, the Air France (AFA) - (KLM) Group has 19 787-9s and six 787-10s on order and will lease 12 787s through AerCap (DEA). (KLM) will operate its first 787-9 on its Amsterdam – Abu Dhabi – Bahrain service.

The 787-9 complements and extends the 787 family. With the fuselage stretched by 6 meters/20 feet over the 787-8, the 787-9 can fly up to +20% more passengers and +23% more cargo farther yet with the same exceptional environmental performance (-20% less fuel use and -20% fewer emissions than the airplanes they replace.

“The (KLM) brand is synonymous with innovation, reliability, and outstanding customer service, which will be perfectly complemented by the addition of the 787 to (KLM)’s fleet,” said Todd Nelp, VP European Sales, Boeing Commercial Airplanes (BCA). “We are honored that the 787 is now proudly flying in the famous (KLM) blue livery and are confident the airplane will play a key role in this historic carrier’s continued success.”

The 787-9 leverages the visionary design of the 787-8, offering passenger-pleasing features such as the industry’s largest windows, large overhead bins with room for everyone’s bag, modern (LED) lighting, air that is cleaner, more humid and at a higher pressure for greater comfort, and technology that senses and counters turbulence for a smoother ride.

(KLM) was founded in 1919, and is the oldest airline still operating under its original name. Based at Amsterdam’s Schiphol Airport, (KLM) is part of the Air France (AFA) - (KLM) Group and serves 135 destinations worldwide. Over the past half century, (KLM) has taken delivery of more than >200 Boeing airplanes.

December 2015: News Item A-1: "Air France (AFA) - (KLM) Takes -$55 million Hit from Paris Terrorism Attacks" by (ATW) Victoria Moores, December 10, 2015.

Air France (AFA) - (KLM)’s traffic was significantly impacted by the November 13 terrorist attacks in Paris, costing the group around -€50 million/-$55 million in lost revenue.

Over the period November 1 - 13, (AFA) - (KLM)’s load factor was +2.7 points up on November 2014, but from November 14 - 30 it was down -0.9 point. “The negative impact of the Paris attacks on total November revenues is estimated to be around -€50 million,” the group said.

Budget brand, Transavia France (TVF) was affected “to a lesser extent,” while cargo was impacted by additional security measures following the attacks.

For the entire month of November, (AFA) - (KLM)’s short- and medium-haul capacity was down -2.4%, but traffic fell -0.8%, causing its average load factor to rise +1.3 points to 77.7% LF. Across (AFA) - (KLM)’s network airlines, including long-haul operations, capacity was up +1%, traffic was up +1.8% and load factor rose +0.6 points to 82.4% LF.

“Current booking trends are in line with a progressive recovery, including a very limited impact on volumes after the end of December 2015,” (AFA) - (KLM) said.

Other airlines, such as Ryanair (RYR), reported a slight softening of demand in the weeks immediately after the attacks, although this was not expected to last.

News Item A-2: SkyTeam (STM) alliance partners Delta Air Lines (DAL) and (KLM) Royal Dutch Airlines are launching a new code share program with Jet Airways (JPL), the Indian airline that is 24% owned by Gulf carrier Etihad Airways (EHD).

January 2016: News Item A-1: "Air France (AFA) - (KLM) Takes Further Hit from Paris Attacks" by (ATW) Victoria Moores, January 11, 2016.

Air France (AFA) - (KLM) is now estimating the November 13, 2015 terrorist attacks in Paris cost it -€120 million/-$131 million in total lost revenues, after incurring another -€70 million hit in December 2015.

“The negative impact of the Paris attacks on December revenues is estimated to be around -€70 million, with significant easing during the last two weeks. Booking trends in December were in line with a progressive recovery,” Air France (AFA) - (KLM) said.

The group had already reported -€50 million in lost revenue for November, taking the total impact to -€120 million to date.

Total passenger numbers across the group’s network airlines were down -1.1% at 6.2 million in December, although average load factor remained stable at 82.8% LF.

News Item A-2: Air France Industries (AFI) (KLM) Engineering & Maintenance and Boeing (TBC) have renewed their joint 737 Component Services Program and agreed to extend the program to 737 MAXs.

News Item A-3: Air France Industries (AFI) - (KLM) Engineering & Maintenance will provide Maintenance Repair & Overhaul (MRO) services to Xiamen Airlines (XIA)’s (GEnx) engines on six Boeing 787-8s that (XIA) has on order. (XIA) is the launch customer for (AFI) - (KLM) (E&M)’s maintenance service on the (GEnx) in Amsterdam.

February 2016: News Item A-1: "Air France (AFA) - (KLM) Returns to Black in 2015" by (ATW) Alan Dron, February 18, 2016.

Air France (AFA) - (KLM) recorded a profit of +€118 million/+$130.8 million for 2015, reversed from a loss of -€225 million for the preceding year. Turnover was €26.1 billion, up +4.6% on 2014’s €24.9 billion.

Announcing the results in Paris, the Franco-Dutch company said the (4Q) results were affected by the November terrorist attacks in Paris, which were estimated to have cost the company -€120 million as customers stayed away from the French capital in the aftermath of the attack.

Operating costs rose by +0.8% year-on-year, with the rise ex-fuel reaching +3.5%. Fuel costs in 2015 accounted for €6.2 billion, down -6.7% because of the company’s fuel hedging policy. Fuel hedging levels will drop from 63% to 54% over the course of 2016. They are then due to decline sharply over the course of 2017 to just 10% by the end of that year, which will give the group considerable savings, assuming the cost of fuel remains low.

The profit figure was boosted by the group’s share of sales in Amadeus (€218 million) and of several slot pairs at London Heathrow (LHR) (€230 million), but negatively affected by the change in value of the hedging portfolio (-€225 million), unrealized foreign exchange losses (-€360 million) and restructuring costs (-€159 million). The group added that it had maintained strict capacity discipline throughout 2015, with an increase of just +0.7%.

(RASK) “remained volatile,” but saw an increase of +2%. However, there was downward pressure on unit revenues (excluding currency), with large drops in demand from Brazil and Japan; those markets together account for 10% of total capacity.

The depressed oil prices also led to oil- and gas-related customers reducing their travel budgets, particularly to Africa.

Cargo activities continued to be loss-making at -€42 million, but improved over 2014’s figure of -€97 million. Five dedicated freighters were phased out during 2015, with full-freighter capacity dropping -23.3% and the group plans to operate just five freighters by this summer. This reduction should allow the cargo operation to return to an operating breakeven in 2017.

Low-cost carrier (LCC) subsidiary, Transavia (TVA)/(TVF) continued to do well, with passenger numbers rising +9% to 10.8 million and the Netherlands-originating (LCC) is continuing to ramp up its activities in France to combat the activities of (LCC) rivals such as Ryanair (RYR) and EasyJet (EZY).

There was a sharp improvement in third-party maintenance revenues, which rose +26.1% to €1.58 billion over the year.

Net debt for the group dropped substantially, from €5.4 billion in 2014 to €4.3 billion last year.

Looking forward, most of the points in the "Perform 2020" restructuring plan have been achieved, said the group, although negotiation of productivity agreements with some French staff remained to be concluded and the planned -1.5% reduction in costs for 2015 was not met, with only a cut of -0.6% recorded.

News Item A-2: Air France Industries (AFI) (KLM) (E&M) will develop a certified cockpit mount installation for Emirates Airline (EAD)’s electronic flight bag (EFB) tablet equipment. The retrofit solution will be available to support (EAD)'s fleets of Airbus A380s and Boeing 777s for more than >200 airplanes.

News Item A-3: Air France Industries (AFI) - (KLM) (E&M) and Oman Air (OMR) have signed a new, long-term contract providing flight-hour support for (CFM56-7)s powering 737NGs.

News Item A-4: Air France Industries (AFI) - (KLM) Engineering & Maintenance (E&M) is launching its Maintenance Repair & Overhaul (MRO) Lab Singapore. Partnering with (RAMCO) Systems, the Lab will develop innovative (MRO) products. And Dennis Wetjens is now Managing Director at (EPCOR), the (AFI) - (KLM) (E&M) subsidiary specializing in (MRO) of pneumatic systems and Auxiliary Power Units (APU)s. Also, (AFI) - (KLM) (E&M) and Uni-Top Airlines (UNT) have signed an agreement for support of (CF6-80C2)s on seven A300s. The contract includes repair and overhaul of engines, along with spare engines. A total of 14 shop visits have been scheduled to date.

News Item A-5: (AFI) - (KLM) (E&M) and SF Airlines (SFA) have finalized an engine support contract covering three (CF6-80C2)s. The contract includes repair and overhaul and spares support.

And (AFI) - (KLM) (E&M) and Air Caraïbes Atlantique have signed a long-term agreement for total care of A330s and A350s. The contract includes line maintenance, "A" checks and "C" checks, component support and engineering support for aircraft and engines.

Malaysia’s Eaglexpress Air has contracted with (AFI) - (KLM) (E&M) to provide component support for six A330s. The contract includes component repair, access to A330 spares pool and a main base kit to be located at Jeddah.

Also, (GMF) AeroAsia and (AFI) - (KLM) (E&M) have signed an (MOU) to develop their partnership in Maintenance Repair & Overhaul (MRO), which now includes (CFM56-7B) overhaul and repair and Boeing 747 "C" checks. The (MOU) covers cooperation in component support, maintenance of (GE90)s, (CFM56-7)s and other (CFM56)s.

(AFI) - (KLM) (E&M) is considering subcontracting maintenance on more 747s to (GMF). JeJu Air (JJA) is expanding its fleet of Boeing 737-800s and will extend its engine maintenance contract with (AFI) - (KLM) (E&M) to a further 18 shop visits for (CFM56-7B)s.

Finally, (AFI) - (KLM) (E&M) and Transavia (TAV) are extending their 737NG component-services contract. The agreement comes under the Component Services Program jointly operated by (AFI) - (KLM) (E&M) and Boeing (TBC).

News Item A-6: See video of Schiphol Airport, Amsterdam:


March 2016: News Item A-1: Jet Airways (JPL), which recently announced a strategic code share with SkyTeam (STM) Alliance partners Delta Air Lines (DAL) and (KLM) Royal Dutch Airlines, confirmed it will close its Brussels hub and move to Amsterdam Schiphol.

News Item A-2: Air France Industries (AFI) (KLM) (E&M) has won a wide-ranging contract with Air Austral (AUX) for support of two Boeing 787s scheduled to enter service in spring 2016. The agreement includes component support, Engineering & Maintenance Control services, plus light and line maintenance.

(AFI) (KLM) (E&M) and Air Corsica (CCM) have signed a long-term contract covering component support for five Airbus A320s. The agreement includes provision of a main base kit, pool access, and flight-hour component repairs.

News Item A-3: (KLM) Royal Dutch Airlines will be giving luxury comfort bags by Dutch designer Jan Taminiau, as an exclusive present to its passengers on intercontinental flights in World Business (C) Class beginning March 27. Taminiau will design six unique comfort bags in 12 different colors for (KLM) every year for the next few years. These new bags for men and women contain items that are essential on a long flight. They are designed to last, so that they can be used after the flight. The first comfort bag is a clutch bag inspired by a dress in Taminiau’s haute couture collection. The second comfort bag is a wallet. Jan Taminiau is following designers Viktor & Rolf, who launched their design for a (KLM) comfort bag in 2011.

News Item A-4: "Amsterdam’s Schiphol Airport Approved for Major Expansion" by (ATW) Linda Blachly, March 21, 2016.

The Schiphol Group has issued a final approval of plans to develop a new pier and terminal at Amsterdam Airport Schiphol. These structures will serve as the foundation for long-term capacity growth and are consistent with the prospects for growth laid down in the Alders Agreement.

The Schiphol Group said the new terminal, scheduled for completion in 2023, will be constructed to the south of Schiphol Plaza, directly next to the air traffic control tower and will be connected to the existing terminal. It is anticipated to serve some 14 million passengers per year.

The new flexible pier will be located near Cargo Station 1 and is expected to be ready for use in late 2019. The pier will accommodate multiple wide- and narrow body aircraft: up to either three wide- and five narrow body aircraft, or 11 narrow body aircraft in total. As a new feature, the aircraft stands on the south side of the pier are flexible. “This means they can be used by both narrow- and wide body aircraft, because each space for a single wide body aircraft might also potentially accommodate two narrow body aircraft,” Schiphol Group said. It aims to strengthen the competitive position of Mainport Schiphol.

The number of passengers and the number of air transport movements alike have been increasing in recent years. Schiphol needs additional space in order to accommodate and facilitate this growth. This means more room for both passengers and aircraft.

Schiphol Group (CEO), Jos Nijhuis said, “We are making investments in order to reinforce, improve and expand our infrastructure, our quality and our accessibility. This commitment has made the realization of the new pier and terminal possible. It represents a hefty investment that will simultaneously provide the foundation for our continued capacity growth, including long-term aspects such as space to further expand the piers in the future. We additionally intend to invest in the station area, the bus station, Schiphol Plaza and Jan Dellaertplein in the coming years. The sum of these parts will serve to strengthen our international competitive position.”

News Item A-5: "Air France, (KLM) Debut New Cabins on Houston 777 Flights" by (ATW) Linda Blachly, March 31, 2016.

Air France (AFA) - (KLM) are introducing new cabins on Houston flights on Boeing 777 airplanes.

(AFA) is offering new La Première (F), Business (C), Premium Economy (PY), and Economy (Y) cabins on Houston - Paris routes. Air France (AFA)’s nonstop, Houston - Paris route is operated daily on a Boeing 777-300 and a 777-200. The new La Première (F) suites are available on 777-300 airplanes, which (AFA) will operate on select flights to Houston starting April 8.

In the new La Première (F) cabin, (AFA) said guests each have a designer suite with over 32 sq ft of personal space. “(AFA) has dressed each suite with thick curtains, equipped with leather tiebacks. In an instant, the La Première (F) seat turns into a fully flat bed over two meters long. With the curtains closed, the partition raised and soft lighting, the suite offers a calming, private space. During the trip, each guest has a personal 24-inch (HD) touch screen, one of the largest ever seen on board.”

In the Business (C) cabin, (AFA) said it has designed a cocoon in the sky. “The seat adapts to the shape of each individual, from seating position to a real two-meter-long bed. At the heart of the curved structure, each passenger creates their own space, according to their desires. The seat’s soft foam is designed to offer impeccable quality of sleep. With a soft duvet and XXL-sized feather down pillow, everything has been designed to ensure peaceful sleep among the clouds. Each passenger has a wide 16-inch (HD) touch screen.”

In the entirely separate Premium Economy (PY) cabin, (AFA) said more comfortable seat cushions and a multi-position footrest “further enhance the travelers experience as they enjoy +40% more personal space than economy (Y) and Sky Priority access.” In Economy (Y) class, there is a new fully revised seat, with more legroom, a new seat cushion, more comfortable headrests and a wider tray table.

Business (C) and La Premiere (F) passengers will have complimentary access to the Air France (AFA) Lounge at Houston-George Bush Intercontinental Airport.

(KLM) Royal Dutch Airlines has introduced its new World Business (C) and Economy (Y) cabins on its Boeing 747-400 Houston - Amsterdam daily nonstop route.

The revamped World Business Class (C) cabin was introduced on the Houston route in January 2014 and is now available on the entire fleet of 747s, 777-200s and 787s. It offers passengers a full flat seat-bed and plenty of space. Meanwhile, passengers traveling in Economy (Y) class have the option of paying a fee to sit in the Economy (Y) Comfort zone, located in the front of the Economy (Y) cabin and offering additional legroom for recline.

The (KLM) Crown Lounge at Houston George Bush Intercontinental Airport accommodates 98 eligible guests, providing 1,115 sq ft of space for them to work, dine or relax. Features include free Wi-Fi and data ports in every seat; cabins with computers and work space; a buffet with snacks and beverages; a smoke-free environment; and check-in facilities for transit passengers.

News Item A-6: (KLM) Royal Dutch Airlines is testing AirFi box streaming in-flight entertainment (IFE) platform on two European routes. (KLM) is the first scheduled, full-service airline to announce AirFi portable (IFE) box tests. Two daily flights between (AMS) - (MAD) - (AMS) and (AMS) - (IST) - (AMS) are part of the four-month trial.

Through to early summer, passengers flying the selected (KLM) flights can use personal mobile devices to connect to a free on board Wi-Fi network created by AirFi boxes and positioned throughout the cabin in overhead bins. Once connected, passengers enter a 100% (KLM)-branded environment called “(KLM) in the Cloud.”

April 2016: News Item A-1: (KLM) Royal Dutch Airlines has launched a series of around 80 biofuel flights from Oslo to Amsterdam using an Embraer E190.

The remaining flights will be operated over a period of five to six weeks, (KLM) said. They will depart from Oslo Airport (Avinor), the first airport to supply biofuel directly from its hydrant system in January this year. Oslo Airport has begun supplying Air BP Biojet via its regular fuel hydrant system, for launch customers (KLM), the Lufthansa Group, and (SAS) Scandinavian Airlines.

In addition to biofuel supplied from the hydrant system, biofuel will also be delivered by separate fuel trucks for a series of KLM Cityhopper (AUK) flights to measure the efficiency of biofuel compared with kerosene during the Embraer (EMB) flights.

“Embraer (EMB) has been directly involved in several initiatives and partnerships for research and development of biofuels for aviation, but these flights with (KLM) are a flagship, as they represent the first initiative Embraer (EMB) developed with aviation biofuels on regular flights. [These tests] will bring the commercialization of alternative energy sources for air travel one step closer,” Embraer (EMB) President, Europe Jorge Ramos said.

(KLM) previously conducted similar tests in cooperation with Airbus (EDS) and Boeing (TBC).

The biofuel for this series of flights is produced from 100% Roundtable on Sustainable Biomaterials (RSB) certified camelina oil, and in full compliance with the European Union (EU) "RED" standard. The biofuel is produced within the Initiative Towards SustAinable Kerosene for Aviation (ITAKA) project and supplied by Air BP and biofuel supplier, SkyNRG.

(ITAKA) is an (EU)-funded consortium, made up of aerospace and fuel companies including Airbus (EDS) and Embraer (EMB), which aims to produce and distribute sustainable aviation biofuel in Europe.

“For the coming years, the price gap between sustainable and fossil jet fuel remains the biggest challenge to create a stable market for sustainable jet fuel. Therefore engagement of all stakeholders, including governments, industry and end customers, is crucial,” (CEO) SkyNRG, Maarten van Dijk said.

News Item A-2: Air France (AFA) - (KLM) board of directors submitted the proposed appointments of Anne-Marie Couderc, Alex Wynaendts and Hans Smits as board directors for the annual general shareholders’ meeting on May 19. After 12 years of service, Jean-François Dehecq, Leo van Wijk, and Cornelis van Lede will be stepping down as board directors. Couderc has been chair of the Presstalis board of directors since 2011; Wynaendts is (CEO) and Chairman of the executive board of Aegon NV; and Hans Smits is (KLM) supervisory board Chairman.

News Item A-3: Air France (AFA) - (KLM) Group Chairman & (CEO), Alexandre de Juniac is set to replace the retiring Tony Tyler as (IATA)’s Director General & (CEO) after a unanimous recommendation by the (IATA) board of governors.

The board’s recommendation will be up for confirmation at the (IATA) (AGM) in Dublin taking place June 1 - 3. Following an expected confirmation at the (AGM), de Juniac “will take up duties as the head of the association after a short handover period,” (IATA) said in a statement.

“I am honored by the confidence of my industry colleagues and mindful of the heavy responsibilities that the Director General & (CEO) bears,” de Juniac said. “Tony Tyler has done a great job at the helm of (IATA) and I am excited to succeed him. (IATA) has a critical role to play in supporting the success of the aviation industry leading advocacy, safeguarding the industry’s money, building the standards that underpin global connectivity and partnering with stakeholders and governments to drive important changes.”

De Juniac has served as Chairman & (CEO) of Air France (AFA) - (KLM) Group since 2013, which followed a two-year stint as Air France (AFA) Chairman & (CEO). He also previously was an executive at Thales (THL) and served as Christine Lagarde’s Chief of Staff when she was France’s minister for the economy, industry and employment.

“Alexandre will be a great leader for (IATA),” Tyler, who has served five years in (IATA)’s top position, said. “He knows the business well and brings valuable experience from both government and industry.”

Air France (AFA) - (KLM) Group said de Juniac has informed it of his intention to depart the company to accept the position at (IATA). (AFA) - (KLM) said it has initiated a process to determine de Juniac’s successor, who is expected to be named by August 1.

May 2016: News Item A-1: (KLM) Royal Dutch Airlines’ new Boeing 787-9 made its inaugural flight on May 4 between San Francisco International Airport (SFO) and Amsterdam Schiphol Airport (AMS). (KLM) offers 2x-weekly 787 Dreamliner service throughout the summer season in addition to its daily frequency, currently operated by a Boeing 747-400 from (SFO) to (AMS).

News Item A-2: Component specialist Avtrade has expanded its inventory consignment contract with (AFI) (KLM) (E&M). Under the terms of the agreement, Avtrade will store and trade more than >7,500 (AFI) (KLM) (E&M)-owned serviceable components and consumables at its UK headquarters for part provisioning, sale, exchange and lease for the Airbus A320 family, A340s, Boeing 737s, 747s, 777s, Bombardier (BMB) CRJs and Embraer (EMB) aircraft.

News Item A-3: "(KLM) Expands Long-haul Network" by (ATW) Kurt Hofmann, May 13, 2016.

Netherlands-based (KLM) Royal Dutch Airlines launched new services from Amsterdam to Astana on May 3, becoming its second destination in Kazakhstan. The 4x-weekly service is part of the Amsterdam - Almaty - Astana - Amsterdam route.

(KLM), the Dutch flag carrier also added a 2x-weekly, Amsterdam - Salt Lake City service on May 5, becoming 3x-weekly from July 4.

Starting from June 20, daily, Amsterdam - Kuala Lumpur services will increase to 10x-weekly.

For the coming winter schedule, (KLM) will re-open services to Miami, which had been closed in 2012. On October 30, (KLM) will operate 3x-weekly Airbus A330 service. Starting October 31, it will relaunch 3x-weekly, Amsterdam - Colombo Boeing 787-9 service.

From the end of October, the SkyTeam (STM) Alliance member will also increase frequencies from Amsterdam to Havana (Cuba) to 7x-weekly.

“This year we are also launching seven or eight new destinations in Europe. That’s something (KLM) has not done for a long time, and we are able to take advantage now of our agility. (KLM) is experimenting to be a bit more opportunistic in terms of expansion. For example, we have launched some seasonal routes or routes that are served just once per day. This is not typical for a network carrier, but they are really paying off,” (KLM) President & (CEO), Pieter Elbers said.

June 2016: "KLM Debuts Orange-Themed Boeing 777-300ER on Amsterdam - Chengdu Route" by China Aviation Daily" June 16, 2016.

(KLM) Royal Dutch Airlines flew its unique orange-colored Boeing 777-300ER to Chengdu on June 16 to celebrate the 10th anniversary of the Amsterdam - Chengdu route.

(KLM) rolled out a special orange livery on June 14, in which the well-known (KLM) Blue was being combined with orange highlights.

The 777-300ER will be in operation on the Rio de Janeiro - Amsterdam route during the Olympic Games. On August 22, (KLM) will use its orange Boeing to operate the "Medal Flight" that brings the Dutch Olympic heroes home.

July 2016: News Item A-1: (KLM) Royal Dutch Airlines Ground Staff (MT), represented by the (FNV) union, is threatening industrial action triggered by talks toward a new labor agreement.

“On July 21, (KLM) received an ultimatum from the (FNV) union in response to (KLM)’s final proposal for a new collective labor agreement for ground personnel. In its ultimatum, the (FNV) union said it will take labor action if (KLM) does not issue a written response before July 26, accepting the (FNV)’s demands, some of which are new,” (KLM) said.

The Dutch carrier said it will consider (FNV)’s proposal, but added that the other ground handling unions are planning to present the deal to their members “in neutral terms.”

“We are faced with the reality that the world around us has changed, and that we too must change. Recent benchmarks indicate that, despite the labor contracts negotiated last year, there is still a big gap between (KLM) and its competitors. In order to invest, grow and retain employment opportunities, it is therefore essential that we reduce our costs in line with negotiated targets by raising productivity,” (KLM) said.

Among other items, the proposal on the table includes a salary increase from January 1, 2018, employment protection, a €1,600/$1,755 pay-out and a “significantly improved” profit-sharing scheme.

“Any further adjustments to this final proposal would price (KLM) out of the market and make our growth plans and ambitions irresponsible,” (KLM) said.

News Item A-2: Air France Industries (AFI) (KLM) (E&M) was selected by SunExpress (SNS) to provide (CF6-80E1) (Airbus A330) maintenance.

September 2016: News Item A-1: "Air France (AFA) Navigates a Maze of Labor Tensions, as (KLM) is Quietly Improving" by Airline Weekly (INDEPENDENT WORLDWIDE COVERAGE).

Poor financial results. Heavy indebtedness. And of course, labor unrest. All three come quickly to mind when thinking about Air France (AFA)/(KLM) in its current troubled state. But it’s the French airline, much more so than the Dutch one, where most of these problems fester.

(AFA) 62%, (KLM) 38% (that was the breakdown of each carrier’s revenue contribution to the group in 2015, not counting their Transavia (TAV) subsidiaries and other non-airline business units like cargo, maintenance and catering. (KLM), however, punched above its weight in producing not 38% but 45% of their combined operating profits.

In margin terms, (AFA) earned a 3% result last year, while (KLM)’s result was 4%. Not terribly impressed by the difference? Well, that’s not quite the whole story. Last year was particularly difficult for (KLM) given its outsized exposure to troubled markets in East Africa and the (ASEAN) region, the latter ever more exposed to Gulf carrier encroachment. In fact, (KLM) even underperformed (AFA) in 2015’s first and fourth quarters. But that’s not usually the case. In 2014, (KLM) earned a +$230 million operating profit that helped soothe the pain of a -$413 million loss on the French side. The margin differential then was +2% versus -2%. Operationally too, (KLM) proved critical in keeping people and funds flowing during a two-week (AFA) pilot (FC) strike that fall.

So far this year, (KLM) is again doing the lion’s share of the company’s heavy lifting. In the first six months of 2016, it contributed 38% of revenues. But this time, it contributed 93% of operating profits. (AFA) barely broke even, while (KLM)’s operating margin was 5%. If it were an independent airline, (KLM)’s performance wouldn’t be quite as good as that of British Airways (BAB). But it would be similar to Lufthansa (DLH)’s. Or maybe not. (KLM), of course, is not an independent airline, and its current profits are greatly assisted by the benefits it enjoys from being attached to (AFA) (the amplified schedule utility and greater traffic feed, for example, and the lower prices it pays for airplane and other assets thanks to the group’s muscular purchasing power. Also critical are the revenue synergies it derives from powerful overseas ventures, most importantly one with (AFA), Alitalia (ALI) and Delta (DAL). Indeed, (KLM) knows its fortunes are more secure with (AFA) than without it. And it recognized the perils of loneliness many years ago (1993, in fact, when it pioneered the concept of overseas joint venturing with Northwest (NWA), leading to a USA - Netherlands "open skies pact," the first of its kind). (KLM) then nearly merged with Alitalia (ALI). Shortly thereafter, came a near-merger with (BAB). Finally, in 2004, it combined with (AFA).

The marriage has mostly been a happy one, underpinned by solid if unspectacular profits, growth and labor peace during much of the first decade. But make no mistake: Tensions have simmered in the past few years as (AFA)’s higher cost base and edgier unions exposed shortcomings in the group’s ability to prosper, leading to a string of worryingly poor financial results and that gap between the carrier’s relative profit contributions. Some (KLM) workers, supported by some Dutch politicians, began expressing frustration. This spring, when these tensions were attracting media attention, (IAG) (CEO) Willie Walsh even told "Bloomberg News" that he wished (BAB) and (KLM) had merged after all, adding hints that the (IAG) would still be interested if ever a divorce with (AFA) took place.

Given their deep level of integration, any such break up is highly unlikely. But just its mere mention underscores the growing divergence of their financial results and operational reliability. (KLM), in fact, is doing better financially than (AFA) partly because of (AFA)’s strike-induced operational unreliability. Combine that with all of (DLH)’s strikes, and it’s no wonder that many European business (C) travelers are choosing to fly with (KLM). And given the choice of connecting through Paris or Amsterdam, some loyal to the (AFA)/(KLM) group as a whole, opt for the latter.

That’s only one way in which (KLM) is reaping benefits from its relative success. Executives of the larger (AFA)/(KLM) group are, sure enough, rewarding it and its workers with capacity growth at a time when (AFA) is shrinking. It’s not a lot of growth ((KLM)’s (ASK)s rose just +2% (y/y) last quarter. But it’s better than (AFA)'s -1% contraction.

It’s likewise important to recognize (KLM)’s (y/y) financial improvement, compared to (AFA)’s (y/y) financial stagnation. That was certainly true last quarter, when (KLM) saw revenues drop -3% but operating costs fell -8%. (AFA) experienced a deeper decline in revenues (-6%) and a less impressive fall in operating costs (also 6%). This reflects a number of helpful developments unique to the Dutch side, including the recovery of markets like Kenya and Indonesia, the strength of markets like Sweden (Amsterdam is a leading hub for Scandinavia), the introduction of new planes like 787-9s and E175s and the resilience of Amsterdam’s tourist market (France’s tourism market, by contrast, is struggling due to security fears).

Amsterdam, moreover, has lower costs, more runways and fewer labor and security-related disruptions than at other top hubs like Paris Charles de Gaulle, Frankfurt, London Heathrow and Istanbul. (KLM), meanwhile, has less shorthaul exposure than (AFA) (the French airline’s large shorthaul losses are a big factor in the group’s overall profit weakness. Recently, the (KLM) side of the business got a boost from partnering with India’s Jet Airways (JPL) for connecting itineraries through Amsterdam. And last month, (KLM) began participating in the joint venture (JV) already established between (AFA) and China Eastern (CEA), in conjunction with the Chinese carrier’s new flights to Amsterdam.

Critically, (KLM) has lower costs than (AFA), with the differential widening as (KLM) implements labor reforms. Some minor unrest among ground workers notwithstanding, the group’s Amsterdam operations have been largely strike free, despite management demands for labor concessions. As (AFA) battled with unions, (KLM)'s truck deals with its three major work groups (pilots (FC), flight attendants (CA) and ground workers (MT). The pilot (FC) agreement, most importantly, runs through the end of 2017 and includes productivity improvements, profit sharing and a provision to change pension eligibility from age 56 to 58. Other deals are of shorter duration but likewise include cost concessions and pay freezes.

This should put (KLM) in an even better position to compete at a time when (AFA)’s earning power is in some ways deteriorating, most notably due to the falloff in French tourism. To further improve its network, (KLM) will join its French counterpart in the Tehran market this fall, benefiting from Iran’s small steps toward integration into the global economy, while also adding the Namibian capital, Windhoek. Miami, Dublin, and Colombo are among other adds this winter.

This follows the launch of routes to places like Salt Lake City, a hub for (DAL), and Astana (AKZ) in Kazakhstan. (KLM) has also added some secondary UK cities with poor access to London Heathrow (LHR), ie, Southampton and Inverness, while withdrawing from money-losing routes like Dallas-Fort Worth and Fukuoka.

Nevertheless, (KLM) does have some thorny challenges in areas like pension reform, which is causing some tension with pilots (FC), and growing shorthaul competition from low-cost carriers (LCC) in Amsterdam. Amsterdam happens to be one of Europe’s fastest-growing airports this year, with traffic through June, up nearly +10% from 2015 levels. But that’s less a reflection of (KLM)’s own traffic growth than it is growth from carriers like easyJet (EZY), Amsterdam’s second busiest airline. (IAG)’s Vueling (VUZ) is another (LCC) with a growing base at Amsterdam’s Schiphol airport.

Ryanair (RYR), meanwhile, entered Schiphol for the first time just last year. A large buildup in Scandinavian longhaul capacity, from the likes of (SAS), Norwegian (NWG)/(NAI), Icelandair (ICE), (WOW) Air and Finnair (FIN), certainly does (KLM) no favors, given Amsterdam’s traditional role as a gateway to Scandinavia. Less than <3 hours away by car, meanwhile, is the German city of Cologne, where (DLH) is undertaking a major long haul and short haul buildup of Eurowings (EWG). Air Berlin (BER) is expanding long haul options from nearby Düsseldorf too.

Even within (AFA)/KLM, (TAV)’s growth from Amsterdam puts pressure on (KLM)’s shorthaul yields, especially as (TAV) tries to convert from a more charter/tour operator-oriented model to one more reminiscent of an (EZY) or Vueling (VUZ).

These won’t be easy challenges to meet. Still, they pale in comparison to those faced at (AFA). Then again, (AFA)’s problems are very much (KLM)’s problems too (in the end, what matters is how the group as a whole is performing. And right now, no matter how well (KLM) is doing, the group is not performing well).

News Item A-2: Air France (AFA) - (KLM) has signed an agreement with connectivity provider Gogo, covering Wi-Fi installation across 124 long-haul airplanes.

Announcing the deal on September 29, Air France (AFA) - (KLM) said Gogo will equip 83 (AFA) airplanes (15 Airbus A330s and 68 Boeing 777s) and 41 from (KLM)’s long-haul fleet (12 A330s and 29 777s).

The installations, which come alongside (AFA) - KLM’s Wi-Fi-equipped 787s, will start at the end of 2017. (AFA) - (KLM) said the airplanes will be equipped with Wi-Fi as well as a free portal that will be accessible via passenger devices, giving access to flight information, travel details and in-flight entertainment (IFE).

“The 2Ku product from Gogo offers a future-proof platform based on the latest antenna technology, bringing flexibility to adapt to growing demands from our customers,” (AFA) - (KLM) said.

(KLM) is already operating 8 Wi-Fi-equipped 787s and Air France (AFA) will receive its 1st 787 on January 9 next year. “The group’s Boeing 787s, which offer Wi-Fi on board, are equipped by Panasonic Avionics, and offer the same portal and products as planned on the rest of the long-haul fleet,” (AFA) - (KLM) said.

SkyTeam (STM) Alliance members (AFA) and (KLM) operate a fleet of 534 airplanes across its 4 brands (AFA), (KLM), Transavia (TVA)/(TVF) and HOP! spanning a network of 320 destinations. In 2015, the Group handled 89.8 million passengers.

October 2016: News Item A-1: (KLM) Royal Dutch Airlines will begin operating 3x-weekly Amsterdam Schiphol (AMS) - Minneapolis-St Paul (MSP) Airbus A330-200 service from March 27, 2017. The new service comes in addition to 3x-daily (AMS) - (MSP) service currently operated by Delta Air Lines (DAL), Air France (AFA) (KLM)’s transatlantic joint-venture (JV) partner.

News Item A-2: Air France (AFA) (CEO) Frederic Gagey is expected to move to become (AFA) - (KLM) Group (CFO), as the Franco-Dutch firm prepares to announce its new strategy.

Gagey has been (AFA) (CEO) since 2013. Sources close to the situation said that Gagey will succeed (CFO) Pierre-Francois Riolacci, who has already announced plans to step down.

The change is thought to be linked with the fragile labor situation at Air France (AFA), which triggered pilots (FC) and cabin crew (CA) strikes over the summer.

Newly appointed Air France (AFA) - (KLM) (CEO), Jean-Marc Janaillac is expected to lead Air France (AFA) on an interim basis until a permanent successor is found.

November 2016: News Item A-1: The Air France (AFA) - (KLM) Group posted +€544 million/+$610.5 million in net income for the 2016 3rd quarter, up +13.1% from €481 million in the year-ago period. Revenue for the quarter was €6.9 billion, down -5% from €7.3 billion in (3Q) 2015.

The Group’s total operating costs were €6.2 billion, down -3.5% from €6.4 billion a year ago; the operating result for the quarter was €737 million, down -16.3% from €880 million in (3Q) 2015.

(AFA) - (KLM) said the operating result was “notably impacted by the 7 day cabin crew (CA) strike in July and August 2016, which had a negative impact of an estimated -€90 million.”

The Group saw passenger numbers for the quarter rise +2.5% year-over-year (YOY) to 26.6 million compared to 25.9 million in (3Q) 2015. Capacity increased +1% (YOY) to 94.1 billion (ASK)s.

For the Group’s passenger network business ((AFA), (KLM) and HOP!), total revenue for the quarter was €5.5 billion, down -7.2% from €5.9 billion in (3Q) 2015. The operating result for the passenger network was €664 million, down -16.8%.

Low-cost subsidiary Transavia (TAV) posted 3rd-quarter passenger revenue of €490 million, up +10.9% from €442 million in the year-ago period. (TAV)’s 3rd-quarter operating result was €92 million, up +19.5% (YOY).

The Group’s cargo business revenue for the quarter was down -16.6% to €487 million compared to €584 million in (3Q) 2015. The division showed an operating loss for the quarter of -€100 million, deepened from a -€81 million loss in the year-ago quarter.

The Group said it “continued to restructure its cargo activity to address the weak global trade and structural air cargo industry overcapacity full-freighter capacity was thus reduces by -22%, leading to a decrease in total cargo capacity of -3.1%.”

In its outlook for the year, the company said its “global context remains highly uncertain regarding the geopolitical and economic environment in which we operate,” citing unit revenue pressure brought on by fuel price volatility, overcapacity on several markets, and “a special concern about France as a destination.”

News Item A-2: (KLM) Royal Dutch Airlines added the Boeing 787 on its New York (JFK) - Amsterdam route. The 787 will operate 2x-weekly through January 22, 2016.

News Item A-3: (KLM) Royal Dutch Airlines and China Airlines (CHI) of Taiwan will expand cooperation effective 2017. From January 9, (CHI) will begin operating 4x-weekly direct services between Taipei and Amsterdam with a new Airbus A350, on Mondays, Wednesdays, Fridays and Saturdays. (KLM) already operates daily, direct, Boeing 777 service between Amsterdam and Taipei, with a tail-end service to Manila, Philippines.

News Item A-4: Air France (AFA) - (KLM) has appointed Franck Terner, who has been the Air France (AFA) - KLM Executive VP Engineering & Maintenance since (2013-08), as the next (CEO) of Air France.

In a statement dated November 3, but released to the group’s website on November 2, the Franco-Dutch airline group confirmed the anticipated leadership change.

Terner will succeed Frédéric Gagey, who will in turn become Air France (AFA) - (KLM) (CFO), replacing Pierre-François Riolacci whose departure was announced in July.

“The Air France (AFA) - (KLM) and Air France (AFA) boards of directors met on November 2 and decided to change the group's governance, to support the implementation of the "Trust Together" project and to enhance the decision-making process. The functions of Chairman and (CEO) of Air France are now separate, and Jean-Marc Janaillac, Chairman of (AFA) - (KLM) Group has also been appointed Chairman of Air France (AFA).

Terner joined (AFA) in 1988 as a Concorde SST Production Engineer. He then worked his way through a series of Maintenance roles, becoming Head of Aircraft Maintenance at (AFA) subsidiary, Regional in 2002. He later became Executive VP Operations & Support at Regional and, in 2008, he became (COO) of Regional. In 2010, Terner was appointed Air France Industries (AFI) VP and, since July 1, 2013, he has been (AFA) - (KLM) Executive VP Engineering & Maintenance.

“I have complete faith in the qualities of Franck Terner to accelerate the transformation and growth of (AFA), and mobilize all the company's energy around the success of the "Trust Together" project. Franck Terner has spent his entire career in the Group, which he knows perfectly. He will be an excellent leader for (AFA) staff. He has a results-oriented culture and wide experience of social dialogue, which gives him everything he needs to succeed in his mission to serve the growth of (AFA) and the restoration of trust,” Janaillac said.

December 2016: News Item A-1: Air France Industries (AFI) (KLM) (E&M) has an AirAsia (ASW) contract for component support for up to 304 Airbus A320neos.

News Item A-2: Air France Industries (AFI) (KLM) (E&M) inaugurated a new Materials & Logistics Service Center in Kuala Lumpur.

News Item A-2: Thai Airways International (TII) took delivery of its 2nd A350-900 (050) on lease from (CIT) Aerospace (TCI).

News Item A-3: "International Airlines Increase Capacity, Frequencies to Russia" by (ATW) Polina Montag-Girme montag.girmes@gmail.com, December 2016, 2016.

Thai Airways (TII) has relaunched Bangkok Suvarnabhumi - Moscow Domodedovo Boeing 777-200/300 service on December 15. It will operate 4x-weekly flights on the route. (TII), the Thailand flag carrier ceased Moscow operations in March 2015 because of weak demand. However, in the 1st 8 months of 2016, traffic from Russia to Thailand grew +20%, Thai Airways (TII) VP Bryan Banston said. From 2005 when (TII) started to fly to Domodedovo, it has performed 3,400 flights from this airport to Bangkok; the highest frequency, 5x-weekly, was reached in 2014. This year, passenger traffic exceeded >100,000, Domodedovo International Airport said.

Singapore Airlines (SIA) is set to increase the number of Singapore - Moscow Domodedovo frequencies from 4x- to 5x-weekly from May 30, 2017, simultaneously adding 5th freedom rights on the Moscow Domodedovo - Stockholm portion of the flight from Singapore. (SIA) launched Airbus A350-900 flights, which replaced the Boeing 777, on Singapore - Moscow service on December 15. (SIA) is the 1st carrier flying the A350-900 to Russia.

Lufthansa Group subsidiary Austrian Airlines (AUL) uses the Boeing 777 on Vienna - Moscow Domodedovo service, replacing A320 family and 737 aircraft. (AUL) performs 11x-weekly flights between the cities. (AUL) has flown to Domodedovo for nearly 10 years, carrying 1.96 million passengers, Domodedovo said. At the beginning of 2015, Austrian FlyNiki (NKI) ceased Vienna - Moscow flights and Transaero Airlines (TXD) stopped flying on the route because of bankruptcy.

In October, Dubai-based Emirates Airline (EAD) increased Dubai - Moscow Domodedovo capacity, reintroducing the A380 on 1 out of 2 daily services. According to Domodedovo, Dubai traffic increased +20% in November year-over-year.

(KLM) Royal Dutch Airlines plans to double Amsterdam - Saint Petersburg Boeing 737 service frequency from 1 to 2 daily flights from February 18, 2017. This will increase the number of long-haul flights connections at Schiphol Airport, Saint Petersburg Pulkovo International Airport said.

January 2017: News Item A-1: Air France (AFA) - (KLM) has sold 100% of its London Heathrow (LHR) Ground Handling Subsidiary, Cobalt Ground Solutions, to French company Groupe (CRIT).

Cobalt Ground Solutions was founded from the merger of 2 (AFA) and (KLM)’s ground handling subsidiaries ((AFSL) and the (KGS)) in 2009.

The company performs check-in, ticketing, baggage and ramp handling at LHR’s terminals 3 and 4, as 1 of 8 ground handlers at the airport. Its customers include Aeromexico (AMX),(AFA) - (KLM), China Southern (GUN), Delta Air Lines (DAL), Etihad Airways (EHD), Japan Airlines (JAL)/(JAS), Jet Airways (JPL), Kenya Airways (KEN), (KLM) Cityhopper, Korean Airlines (KAL) and Virgin Atlantic (VAA).

On January 6, (KLM) (CFO) Erik Swelheim confirmed the sale to Groupe (CRIT)’s Group Europe Handling subsidiary has been completed, following the signing of a memorandum of understanding (MOU) in November 2016.

Groupe (CRIT) said the acquisition will rank as the 3rd largest ground handler at (LHR). The French firm has >130 airlines customers and employs 3,000 staff. It provides services at Nice, Paris Charles de Gaulle and Paris Orly through Group Europe Handling, as well as at London City, Dublin and Shannon through a company called Sky Handling Partner. The group is also active in Congo, the Dominican Republic, Gabon and Sierra Leone.

“The integration of Cobalt Ground Solutions, to be effective on January 1, 2017, would bring to the airport division of the group additional sales >€40 million/$42.2 million,” Groupe (CRIT) said, when it announced the (MoU) in November.

(AFA) - (KLM) has already completed 2 other recent disposals, selling stakes in catering firm Servair and industry Information Technology (IT) provider Amadeus.

News Item A-2: Air France (AFA) - (KLM) Cargo appointed Marcel de Nooijer as Executive VP. He joined (KLM) in 1995 and has gained commercial and operational experience working in various positions at (KLM), and its Cargo division, as well as at (AFA) - (KLM).

News Item A-3: Lobby group "Airlines for Europe" (A4E) has completed its 1st year of operations, bringing both successes and some ongoing frustrations. (A4E) was started by Europe’s 5 major airline players: Air France (AFA) - (KLM), UK-based easyJet (ESY), the International Airlines Group (IAG), Lufthansa (DLH), and Irish low-cost carrier (LCC) Ryanair (RYR) in January 2016 to focus on key policy areas, including airport charges, air traffic control (ATC) strikes and taxation.

747-406 (24001, PH-BFD) withdrawn from use and ferried Amsterdam to Mojave.

February 2017: 2 737-8K2 (39259, PH-HSE "Blauwstaart/Blue Tail;" 39260, PH-HSD "Groene Specht/Green Woodpecker") and 777-306ER (61604, PH-BVS "Nationaal Park Darien/Darien National Park"), Air Lease Corporation (ALE) leased.

March 2017: News Item A-1: "European Commission (EC) Re-imposes Cargo Cartel Penalties" by Alan Dron alandron@adepteditorial.com, March 17, 2017.

The European Commission (EC) has reinstated fines totaling €776 million/$834 million on 11 airlines for operating a price-fixing cartel on air freight from 1999 to 2006. More legal hearings are likely, as at least 1 of the carriers immediately said it would appeal the decision.

The (EC) originally imposed the penalties in November 2010, but these were annulled by a decision of the European Union’s (EU) General Court in December 2015 on procedural grounds, which ruled there was a technical discrepancy in the prosecution. In a March 17 announcement, the (EC) said it had resolved the discrepancy and was re-imposing the financial penalties on 11 air cargo carriers: Air Canada (ACN), Air France (AFA)/(KLM), British Airways (BAB), Luxembourg-based Cargolux (CLX), Hong Kong flag carrier Cathay Pacific Airways (CAT), Japan Airlines (JAL)/(JSA), (LAN) Chile, Dutch cargo carrier Martinair (MTH), Australia's Qantas (QAN), (SAS) Scandinavian Airlines and Singapore Airlines (SIA).

The (EC) said that a 12th member of the cartel, Lufthansa (DLH) and its subsidiary Swiss International Air Lines (CSR), was spared from the financial penalties after it applied for immunity in 2005 and revealed details of the alleged arrangements between the airlines.

These were said to consist of collusion between the airlines at both bilateral and multilateral levels to fix the level of fuel and security surcharges on cargo. After the initial verdict, all the airlines except Qantas (QAN) appealed. The financial penalty thus became final for QAN). Millions of businesses depend on air cargo services, which carry >20% of all (EU) imports and nearly 30% of (EU) exports,” (EC) Commissioner Competition Policy Margrethe Vestager said. “Working together in a cartel rather than competing to offer better services to customers does not fly with the (EC). Today’s decision ensures that companies that were part of the air cargo cartel are sanctioned for their behavior.”

The (EU) can fine companies participating in cartels up to 10% of their revenue in the year preceding the adoption of a verdict. (SAS) immediately said it would appeal. “We strongly question the European Commission’s move to re-impose a decision that has already been annulled once by the [General Court],” (SAS) General Counsel Marie Wohlfahrt said. “Throughout the entire process, (SAS) has cooperated with the (EC) and, for >11 years, has argued against the (EC)’s perception that (SAS) Cargo had participated in a global cartel.”

Nevertheless, the fine would be recognized as a nonrecurring expense by (SAS) in its earnings for (2Q) 2016/2017. Air France (AFA) - (KLM), which will be fined €325 million if the penalties become final, said it would analyze the new decision and whether to appeal it again at the General Court. It added that the fines had been covered in its financial accounts since 2010.

News Item A-2: Air France (AFA) has launched direct flights from its Paris CDG (CDG) hub to Accra (ACC) in Ghana, increasing (AFA)’s presence in the Europe - Africa market. (AFA) is starting the route 3x-weekly initially operated by its 208-seat A330-200s, but later this month it will switch the airplane type to its larger 312-seat 777-200s. The Air France (AFA) - (KLM) Group now offers 10 flights between Europe and Ghana, with (KLM) operating daily from its Amsterdam hub. The 4,830 km sector started on February 28 and faces no direct competition.

News Item A-3: (KLM) has confirmed that 1 of its Boeing 747s was involved in an incident at Chicago O'Hare International Airport, after a loading vehicle caught fire in close proximity to the airplane

The Boeing 747 was being prepared to operate flight KL612 from Chicago O'Hare to Amsterdam when the incident happened at 7:35 pm local time on March 8. “An unhitched baggage belt caught fire near a (KLM) airplane at Chicago airport. The fire emitted a substantial cloud of smoke. The passengers had not yet boarded at the time of the fire. The situation was under control quickly and the 747 departed after a limited delay,” (KLM) said. Video footage shows large flames coming from the ground handling vehicle that appeared to be connected to the airplane at the time.

A (KLM) spokesman said the 747 was not damaged by the fire. “Although it was only a small fire, the fire department responded with full equipment according to procedures,” he said.

According to Flightradar24, KL612 on March 8 was operated by a 747-400 carrying the tail number (PH-BFE).

News Item A-4: Air France (AFA) - (KLM) named Stéphane Ormand to the executive position of VP & General Manager Air France (AFA) - (KLM) USA.

April 2017: News Item A-1: Air France (AFA) - (KLM), Singapore Airlines (SIA) and the latter’s regional subsidiary SilkAir (SLK) have signed a memorandum of understanding (MOU) to code share on each other’s flights. The agreement is scheduled to become effective April 27, subject to regulatory approvals.

(AFA) will add its AF code to Singapore Airlines (SIA)-operated flights beyond Singapore to Melbourne and Sydney in Australia, as well as on SilkAir (SLK)-operated flights to Kuala Lumpur and Penang (Malaysia) and to Phuket (Thailand).

In return, (SIA) will add its SQ designator to (AFA)-operated flights beyond Paris Charles de Gaulle airport to 10 European destinations: Bordeaux, Lyon, Marseille, Nice, and Toulouse in France; Aberdeen, Edinburgh and Newcastle in the UK; Lisbon (Portugal) and Madrid (Spain). The agreement is intended to provide customers more options and seamless connectivity when traveling between Europe, SE Asia and Australia.

The development is the latest in a series of moves by (SIA) to enlarge or extend its portfolio of code share agreements with major carriers, including the Lufthansa Group, (SAS) Scandinavian Airlines and Russia’s (S7) (SBR) Airlines.

(AFA) and (SIA) also intend to explore the possibility of expanding the code share to other airlines within their respective groups. Also under consideration is the possibility of members of (AFA) - (KLM)'s "Flying Blue" and (SIA)’s "KrisFlyer" frequent flyer schemes earning points on the new code share sectors.

(AFA) - (KLM) Senior VP Alliances Patrick Roux said the agreement will “significantly improve the connections for (AFA) customers from Singapore to Australia. This kind of partnership is part of our aim to expand our market position and increase our range of destinations for our customers all around the world.”

Welcoming the “significant benefits” to passengers as a result of the new code share agreement, (SIA) Senior VP Marketing & Planning Tan Kai Ping said the agreement “provides a strong foundation for future commercial cooperation opportunities between our 2 airline groups.”

News Item A-2: Ireland-based regional carrier CityJet will station crew in the Estonian capital of Tallinn for the 1st time and provide additional capacity for the regional arm of Dutch flag carrier (KLM).

CityJet, which is shifting its operations increasingly from scheduled services under its own name to providing flights for others, announced in February 2017, in so-called “white label” services for (SAS) Scandinavian Airlines. The flights are operated using Bombardier CRJ900 regional jets on thinner (SAS) routes. The Irish carrier has 12 CRJ900s and +10 more on order.

CityJet said, “CityJet can confirm it is recruiting for crew to be based in Tallinn, Estonia. With a number of our aircraft overnighting at Tallinn, it makes sense for CityJet to base crew locally to improve efficiency.” Meanwhile, CityJet and (KLM) Cityhopper (AUK) have announced a new wet-lease arrangement on routes between the UK and the Netherlands. This increases the scope of an existing code share agreement between the 2 companies.

From May 15, (KLM) Cityhopper (AUK) will wet-lease 2 Avro RJ85 regional jets from CityJet to operate 4 additional Amsterdam Schiphol - London City Airport services each weekday, bringing (KLM)’s weekday frequency to 8. 4 will be operated by (KLM) Cityhopper on Embraer E190s.

CityJet will also operate several existing flights to Birmingham, Hamburg, Bordeaux and Belfast on behalf of (KLM).

Under the new agreement, CityJet will also place its code on (KLM)-operated services connecting Amsterdam to London City, Manchester and Newcastle. “As we continue our strategy of refocusing CityJet into an airline with a strong mix of scheduled services and wet-lease operations on behalf of other airlines, this new agreement sees further growth in our portfolio of wet-lease customers in parallel with using our extensive experience of operations into London City Airport,” CityJet (CCO) Cathal O’Connell said.

CityJet retains services under its own name at London City to Dublin, Antwerp, Florence, Avignon, and Toulon.

“(KLM) has been a long-term partner of CityJet in its operations from the Netherlands to London City Airport,” (KLM) Cityhopper (AUK) Managing Director Boet Kreiken, added. “With the new wet-lease agreement, we will be able to increase our frequency into London City Airport, offering greater choice for our customers.”

News Item A-3: Amsterdam's Schiphol Airport has opened a temporary departure hall to help cope with growing passenger numbers.

The hall, which has been put in place in response to a major growth of passengers traveling between destinations in Europe's Schengen Area, will be used by around 2 million passengers annually. The Schengen Area allows passengers from most countries in the 28 European Union (EU) nations to travel between each other without visas.

With the expansion of check-in and security capacity, the airport aims to continue offering a good service over the next 3 years.

Royal Schiphol Group President & (CEO) Jos Nijhuis said he saw the number of Schengen passengers increase by no <17% in 2016 to >60 million. Passenger numbers are anticipated to grow to 80 million over the medium term.

The new departure hall offers airlines space for passenger check-in and baggage. The hall, which has an area of around 4,000 sq m/43,000 sq ft, has 22 check-in desks, 6 security lanes, self-service check-in kiosks, sanitary facilities and seating. It has been built on the roof of the South Baggage Hall and linked by means of a corridor to the existing Departure Hall 1. The new hall bears the name Departure Hall 1 - check-in desk row 1A.

(KLM) Royal Dutch Airlines, the Lufthansa Group (including Lufthansa (DLH), Austrian Airlines (AUL) and Swiss International Air Lines (CSR)) and (LOT) Polish Airlines will use the hall, which will remain in service until the end of 2019 when it will be dismantled and re-used elsewhere, if necessary. The security filters can also be used at other locations later.

"Our challenge for the coming years is to keep quality and capacity at the requisite level," Nijhuis said. "This is why we have begun creating extra capacity for the long term, for instance by building a new pier and terminal."

"That's a major investment, which also forms the basis for further growth in capacity. We are also further developing the railway station zone as well as landside infrastructure, such as roads and parking facilities. With our investments we aim to strengthen, improve and increase our infrastructure, quality and accessibility."

May 2017: "(KLM) and (TUI) Netherlands to Expand Cooperation" by Alan Dron alandron@adepteditorial.com, May 23, 2017.

(KLM) and package holiday operator (TUI) Netherlands (HOL) will intensify their existing cooperation agreement.

(TUI) Netherlands (HOL) has its own carrier, TUIfly Netherlands, which operates a small fleet of Boeing 737-800s, 767-300s and 787-8s.

The (TUI) Group is a Germany-based multi-national holiday company.

The 2 companies intend to start cooperating on several new routes, while “substantially” expanding their combined capacity on routes they already serve together. “We want to consolidate our leading position in both the business and leisure market, and expand wherever possible,” (KLM) Netherlands Director Harm Kreulen said. “The market for package trips is one segment where there are plenty of opportunities, particularly in view of the many new destinations (KLM) has added to its network in recent years.”

“We strongly believe in this intensification of cooperation between (KLM) and (TUI),” (TUI) Netherlands (HOL)’s General Manager Arjan Kers added. “By combining our strengths, we will generate further growth, with new destinations and more passenger capacity.”

The stepped-up cooperation will see (TUI) restoring Kenya to its range of destinations. From November, (TUI) will offer capacity on 3x-weekly (KLM) flights to Mombasa, with an intermediate stop in Nairobi.

In addition, (TUI) will offer a substantial number of seats on nonstop flights that (KLM) intends to start operating to Mauritius in November. (KLM) will operate 3x-weekly Boeing 787 flights to the Indian Ocean island.

Earlier this year, (KLM) began operating flights to Cartagena (Colombia) and in the winter also began serving San José in Costa Rica, where (TUI) will begin operating tours next winter.

(TUI)fly will suspend its own flights to St Maarten this winter, but will continue to offer the Dutch market package trips to this island in cooperation with (KLM). The 2 carriers will also jointly serve various European cities.

July 2017: Dutch national carrier (KLM) is to improve the utilization of its flight simulator capacity at its Amsterdam base.

(KLM) has 8 simulators, which can provide around 15,000 training sessions a year. To make best possible use of the simulators, (KLM) needs to minimize unused time, identify any extra capacity that can be rented out to other airlines if not needed by (KLM), and improve the management of machine maintenance. Most maintenance is undertaken overnight.

Currently, (KLM) uses a combination of manual planning and a 1990s-vintage legacy system to plan its simulator usage. While this allocates slots on the simulators, it cannot take into account factors such as new collective labor agreement rules and differing session durations for external users.

To improve the situation, (KLM) has extended its existing relationship with Quintiq, a Dutch supply chain planning and optimization specialist and part of France’s Dassault Systèmes group.

Quintiq will create a simulator planning solution that will ensure that information on the level of demand for training is kept up-to-date and that any potential conflicts between the levels of supply and demand are recognized ahead of time and resolved.

“The combination of our crew planning system and this new simulator capacity optimizer, both developed by Quintiq, will enable us to maximize the use of our simulator capacity,” (KLM)’s VP Cockpit Crew Services Robert Kunen said.

“We can better match supply and demand, and predict constraints and opportunities in the longer term. As a result, we can facilitate crew training more efficiently.”

When the new system comes online, (KLM) planners will be able to allocate simulator time up to several years in advance, if necessary. However, they will also be able to adjust those long-term plans in the light of shorter-term changes in demand.

August 2017: News Item A-1: "Air France (AFA) - (KLM) & Virgin Atlantic (VAA): Culture Clash?" by Victoria Moores victoria.moores@penton.com, July 28, 2017.

Air France (AFA) - (KLM) pulled a surprise move, announcing plans to acquire 31% of UK long-haul carrier Virgin Atlantic (VAA), but how will the partnership play out in terms of culture and strategy?

From a strategic standpoint, the acquisition joins up a few SkyTeam (STM) alliance dots. (AFA) - (KLM) has a strong relationship with USA major Delta Air Lines (DAL), which in turn has a maximum 49% stake in Virgin Atlantic (VAA). Meanwhile, SkyTeam (STM) alliance members (DAL) and China Eastern (CEA) are each buying 10% of Air France (AFA) - (KLM).

There are definite gains to be had on both sides of the Channel. (VAA) will finally get the short-haul feed it has been craving for years, since its failed attempts to buy UK short-haul carrier bmi. Meanwhile, Air France (AFA) gets a solid London foothold to add to its Paris and Amsterdam hubs.

But do equity partnerships truly work? The "Qualiflyer Group" tried this strategy. It failed. Air Afrique (AFR) also tried it and failed.

Another equity investment story is playing out at the Etihad (EHD) Group, which has just offloaded its stake in Swiss regional Darwin Airline (flying as Etihad Regional). Meanwhile, 2 other investments: Alitalia (ALI) and airberlin (BER) continue to bleed cash, contributing to Etihad (EHD)’s -$1.87 billion net loss for 2016.

The Lufthansa (DLH) Group and the International Airlines Group (IAG)’s portfolio of airline brands seem to be better examples of industry consolidation, but these are typically full-control ventures.

How much strategic benefit do smaller (but significant) equity stakes truly bring, compared with non-equity joint ventures?

Also, how will this fit with the UK’s plans to exit the European Union (EU) (Brexit), if UK carrier Virgin Atlantic (VAA) has 79% foreign ownership (49% Delta (DAL) and 30% (AFA) - (KLM))?

Then there’s the problem of cultural fit. (AFA) - (KLM) and (VAA)’s cultures are very different. (AFA) trades on its lengthy history, exuding a certain elegance and grace. (KLM) is more in line with (VAA), with an edgy, modern and slightly rebellious personality.

But here’s the rub. Air France (AFA) and (KLM) joined forces in 2004 and (despite 13 years together) the 2 companies are still batting a serious cultural divide. How well will (AFA) mesh with (VAA)?

News Item A-2: Dutch airports operator Royal Schiphol Group’s interim net profit has fallen -2.9% to €117 million/$140 million, driven by a -7.1% reduction in airport charges at Amsterdam Schiphol, which took effect April 1. The 2017 reduction came on top of an earlier -11.6% cut from April 1, 2016. The Royal Schiphol Group said the lower charges were partly offset by traffic growth. Passenger numbers at Amsterdam Schiphol were up +8.6% to 32.2 million.

October 2017: News Item A-1: "China Eastern (CEA) and Delta (DAL) Complete Air France - KLM Buy-in" by (ATW) Victoria Moores victoria.moores@penton.com, October 5, 2017.

SkyTeam (STM) Alliance members Air France (AFA) - (KLM), Delta Air Lines (DAL) and China Eastern Airlines (CEA) have completed a series of share transactions aimed at strengthening their strategic partnership.

Under the agreement, which was originally announced July 27, (CEA) and (DAL) are each taking a 10% stake in (AFA) - (KLM), which will in turn acquire 31% of UK-based long-haul carrier Virgin Atlantic (VAA). “Each of (CEA) and (DAL) now holds 10% of (AFA) - (KLM)’s share capital and has consequently 1 director representing it at (AFA) - (KLM)’s board of directors,” (AFA) said.

>75 million new (AFA) - (KLM) shares have been admitted to the Euronext Paris and Amsterdam stock exchanges, injecting €751 million/($893 million) into (AFA) - (KLM). “This operation is an integral part of the "Trust Together" project, allowing (AFA) - (KLM) to regain the offensive, to reinforce its commercial integration with its principal partners and to continue improving its financial structure,” (AFA) - (KLM) said.

News Item A-2: (AFI) (KLM) (E&M) has a (LOT) Polish Airlines’ contract to provide Boeing 737NG and 737 MAX component support.

Fleet:
(definitions)

Click below for photos:
KLM-737-700-2011-06
KLM-737-700-SEP08
KLM-737-800 - 2015-06.jpg
KLM-737-8K2 - 2017-05.jpg
KLM-737-8K2-A
KLM-737-9K2
KLM-737-9K2-T
KLM-747 DATA
KLM-747-300
KLM-747-400
KLM-747-400 NEW LIVERY
KLM-747-400-2011-09
KLM-747-400-ST MAARTEN-2011-01
KLM-747-400F
KLM-747-406
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KLM-747-406ERF
KLM-747-406ERF-KA
KLM-767-300ER
KLM-767-306ER
KLM-777-200 - 2013-03
KLM-777-206ER
KLM-777-300ER - 2014-08
KLM-777-300ER SKYTEAM 2011-08
KLM-777-300ER-FEB08
KLM-777-306ER - 39972 - 2016-06.jpg
KLM-777-306ER - New Livery 2015-05.jpg
KLM-777-306ER-STM-2009-08
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KLM-787-9 - 2015-07.jpg
KLM-A330
KLM-A330-200
KLM-A330-203
KLM-DC-10-30
KLM-DC-2 STORK.jpg
KLM-EMB-190-NOV08
KLM-F 50
KLM-MD-11
KLM-MD-11 KEN HODGES PAINTING

October 2017:

2 737-3K2 (CFM56-3B2), (TAV) LSD, 149Y.

00 737-306 (CFM56-3B1) (1335-23544, /87 PH-BDI) 23543; 23546; RTND 11/00) (1275-23537, /86 PF-BDA; 28719; (RF (KEN); 2957-28750, /97 PF-BTI), 23538 RTND 2004-06. ALL RETIRED BY 2011-10. 120Y.

0 737-4YO (CFM56-3C1) (1723-24344, /89 PH-BPB; 1747-24468, /89 PH-BPC), EX-(AUK), 24344 LST (TAV) 2001-07, RTND 2001-08. 139Y.

00 737-406 (CFM56-3B2) (23856 RTRD 2000-09) (23865 RTND 2000-11) (1768-24514, /89 PH-BDR; 2601-27233, /94 PH-BTG), 25424 W/O 2004-11. TO BE PHASED OUT BY 2012. 24857; TO (BUQ) 2009-12. 27233; TO (BRS) 2013-02. 139Y.

0 737-42C (CFM56-3C1) (24231; 24232; RTND 2000-10) (24814) 24813 RTND (GAX), LST (AXO). (UKL) LSD, SCHIPOL LINE MAINT & "D" MAINTENANCE CHECK BY (ATD), 139Y.

1 737-406 CFM56-3C1) (2161-25412, /91 PH-BTA), STORED. 39C, 108Y.

14 737-7K2 (CFM56-7B22) (2675-30366, /08 PH-BGD; 2705-30371, /08 PH-BGE "ORTOLAAN/ORTOLAN BUNTING" - - SEE PHOTO - - "KLM-737-700-2008-09;" 2714-30365, /08 PH-BGF; 2835-30367, /09 PH-BGG; 3119-38053, /09 PH-BGH; 3172-30364, /10 PH-BGI "VINK/FINCH;" 3292-38054, /10 PH-BGK "NOORDSEE STORMVORGL/FULMAR;" 3407-30369, /10 PH-PGL "RIETZANGLER/WARBLER;" 3569-39255, /11 PH-BGM; 3632-38127, /11 PH-BGP; 3675-39256, /11 PH-BGQ; 3728-39446, /11 PH-BGR; 3762-38634, /11 PH-BGT "ZANGLIJSTER/THRUSH;" 3779-39257, /11 PH-BGU "KOEKOEK/CUCKOO"), WITH WINGLETS. 45C, 84Y.

2 737-7K2 (CFM56-7B22) (3584-38125, /11 PH-BGN; 3590-38126, /11 PH-BGO), (BBB) LSD (2011-10). WITH WINGLETS. 45C, 84Y.

2 737-7K2 (CFM56-7B22) (3797-38128, PH-BGW "ZANGLIJSTER/SONG THRUSH" 2011-10; 38635, PH-BGX "SCHOLEKSTER/OYSTERCATCHER" 2011-10), (TCI) LSD. WITH WINGLETS. 45C, 84Y.

1 737-8BK (CFM56-7B24) (1936-33028, /06 PH-BXU "ALBATROSS"), (TCI) LSD. WITH WINGLETS. 57C, 114Y.

24 +7 ORDERS 737-8K2 (CFM56-7B24) (198-29131, /99 PH-BXA "ZWAAN/SWAN;" 261-29132, /99 PH-BXB "VALK/FALCON;" 305-29133, /99 PH-BXC "KORHOEN/GROUSE;" 355-29134, /99 PH-BXD "AREND/EAGLE;" 552-29595, /00 PH-BXE "HAVIK/HAWK;" 583-29596, /00 PH-BXF "ZWALOUW/SWALLOW;" 605-30357, /00 PH-BXG "KRAANVOGEL/CRANE;" 630-29597, /00 PH-BXH "GANS/GOOSE," 633-30358, /00 PH-BXI "ZILVERMEEUW/HERRING GULL;" 639-29598, /00 PH-BXK "GIERZWALUW/SWIFT;" 659-30359, /00 PH-BXL "SPERWER/SPARROW HAWK;" 714-30355, /00 PH-BXM "KLUUT/AVOCET;" 728-30356, /00 PH-BXN "MEREL/BLACKBIRD;" 2205-30370, PH-BXV, 2007-03; 2467-30360, PH-BXW "PARTRIDGE" 2007-12; 2503-30372, PH-BXY, 2008-02; 2533-30368, PH-BXZ, 2008-03; 2569-37593, PH-BGA, 2008-04; 2594-37594, PH-BGB "WHIMBIEL/REGENWULG 2008-05; 2619-30361, PH-PBC, 2008-05; 3480-37820, PH-PCA "FLAMINGO" 2010-12; 39259, PH-HSE "BLAUWSTAARST/BLUE TAIL" 2017-02; 39260, PH-HSD "GROENE SPECHT/GREEN WOODPECKER" 2017-02; 3648-39443, /11 PH-BCB; 42149, PH-BCD "KOPERWIEK/REDWING"), 30357 RTND (TAV) 2004-07. 30392 FROM (TAV) 2005-03. 30390; (TAV) LSD 2005-10. WITH WINGLETS. 57C, 114Y.

5 737-9K2 (CFM56-7B) (866-29599, /01 PH-BXO "PLOVER/PLEVIER;" 924-29600, /01 PH-BXP "CRESTED COOT/MERKROET;" 959-29601, /01 PH-BXR "NIGHTINGALE/NACHTEGAAL," 981-29602, /01 PH-BXS "BUZZARD/BUIZERD;" 1498-32944, PH-BXT), 1ST IN EUROPE. WITH WINGLETS. 51C, 138Y.

0 747-200F, (TLS) WET-LSD. RTND.

0 747-206 (SUD) (CF6-50E2) (397-21848, /79 PH-BUO "THE MISSOURI;" 539-22380, /81 PH-BUT "ADMIRAL RICHARD E BYRD") 474-22376; 491-22379; STORED MARANA 2001-05. 22379 WFU MOJAVE 2001-12. 21848 ST (PHK) 2003-12. 22380 RTND (ILF) LST (AID) 2003-12. 21660 WFU MOJAVE 2004-01 & ST (GEF) 2004-04. 21549 DONATED TO AVIODROME AT LELYSTAD 2004-02. 22379 ST (SOF) 2004-11. ALL RETIRED. 34C, 432Y.

0 747-306C (CF6-50E2) (600-23137, /84 PH-BUV "SIR GEOFFREY DE HAVILLAND;" 657-23508, /86 PH-BUW "LEONARDO DA VINCI"), 23137 RTND TO LESSOR. 23508 TO (SUR) 2004-03.

0 747-306C (CF6-50E2), 21549 RETIRED 2000-11; 21550; 2000-02 (587-23056, /83 PH-BUU "SIR FRANK WHITTLE"). 23056 ST (PHK) 2003-12. 56C, 241Y, PLTS.

5 747-406 (CF6-80C2B1) (725-23999, /89 PH-BFA "CITY OF ATLANTA;" 732-24000, /89 PH-BFB; 782-24517, /90 PH-BFG; 888-25356, /91 PH-BFL; 969-26372, /93 PH-BFN "CITY OF NAIROBI"), 1 WET-LST (ALI) 1998-11. 24001 WITHDRAWN FROM USE AND FERRIED TO MOJAVE 2017-02. 42C, 36P, 197Y.

15 747-406C (CF6-80C2B1) (), 42C, 36P, 197Y.

3 747-406ERF (CF6-80C2B5F) (1326-33694, /03 PH-CKA "EENDRACHT; 1328-33695, /03 PH-CKB; 1341-33696, PH-CKC "ORANJE;" 1382-35233, PH-CKD, 2007-02), (GUG) LSD. 35233; WET-LST (AFA) 2007-02. (MTH) OPS. FREIGHTER.

17 747-406M (CF6-80C2B1) (735-23982,/89 PH-BFC; 737-24001, /89 PH-BFD; 763-24201, /89 PH-BFE; 770-24202, /90 PH-BFF; 783-24518, /90 PH-BFH; 850-25086, /91 PH-BFI; 854-25087, /91 PH-BFK; 896-26373, /92 PH-BFM; 938-25413, /92 PH-BFO; 992-26374, /93PH-BFP; 1014-27202, /94 PH-BFR; 1090-28195, /96 PH-BFS; 1112-28459, /97 PH-BFT; 1127-28196, /97 PH-BFU; 1225-28460, /99 PH-BFV "CITY OF VANCOUVER; 1258-30454, /00 PH-BFW;" 1302-30455, /02 BH-BFY), 42C, 36PY, 197Y.

0 767-306ER (CF6-80C2B6F) (587-27957, /95 PH-BZA "BLAUWBRUG/BLUE BRIDGE;" 738-28884, /99 PH-BZM "GARIBALDI BRUGBRIDGE") (ILF) LSD. 1 WET-LST (KEN) 2000-02 (781-30393, /00 PH-BZO KARMSUND BRUG/BRIDGE"). 27957; RTND, LST (ZOM) 2005-04. 27958; RTND (ILF), LST (NEO) 2005-10. (ETOPS) EQ'PD. 26263; RTND, LST (ZOM) 2006-01; 27610; RTND; LST (NEO) 2006-06; 28098; RTND; LST (NNA) 2006-04); 27959; 27960; RTND; LST (ARO) 2006-07). 27611; RTND, LST (ETH) 2006-12. 27612; RTND, LST (AKZ) 2007-02. 28884; RTND, LST (HGA) 2007-03. (MTH) OPS. 36C, 188Y.

15 +1 OPTION 777-206ER (GE90-94B) (454-33711, /03 PH-BQA "ALBERT PLESMAN;" 457-33712, /03 PH-BQB "BOROBUDOR;" 461-29397, /03 PH-BQC "CHITZEN-ITZA;" 465-33713, /03 PH-BQD "DARJEELING HIGHWAY;" 468-28691, /04 PH-BQE "EPIDAURUS;" 474-29398, /04 PH-BQF "FERRAR CITY;" 476-32704, /04 PH-BQG "GALAPAGOS ISLANDS;" 493-32705, /04 PH-BQH "HADRIAN'S WALL;" 497-33714, /04 PH-BQI "IGUAZU FALLS;" 499-29399, /05 BH-BQK "KILIMANJARO PARK;" 552-34711, /06 PH-BQL "LITOMYSL CASTLE;" 559-34712, /06 PH-BQM "MACHU PIICHU;" 561-32720, /06 PH-BQN, "NAHANNI NATIONAL PARK;" 609-35295, /07 PH-BQO "OLD RAUMA;" 630-32721, /11 PH-BQP "PONT DU GARD" 2011-06 - - SEE ATTACHED PHOTO - - "KLM-2011-06-DELFT BLUE 777"), 6 (ILF) 12 YR LSD, 35C, 34PY, 249Y.

15 777-200F.

4 777-300ER (GE-90-115B), (ALE) LSD.

12 777-306ER (GE-90-115B) (694-35671, /08 PH-BVA "NATIONAAL PARK DE HOGE VELUWE;" 706-36145, /08 PH-BVB; 787-37582, /09 PH-BVC, 807-35979, /09 PH-BVD; 915-39972, /11 PH-BVF; 1020-38867, /12 PH-BVG; 1029-35947, /12 PH-BVI "NATIONAAL PARK VUURLAND" (ON LHS) & "TIERRA DEL FUEGO NATIONAL PARK (ON RHS); 61604, PH-BVS "NATIONAAL PARK DARIEN/DARIEN NATIONAL PARK"), 24C, 38PY, 223Y.

2 +15/25 ORDERS 787-9 DREAMLINER (356-36113, /15 PH-BHA, 2015-11; 38760, PH-HBC "SUNFLOWER/ZONNEBLOEM" 2015-11), AERCAP (DEA) LSD 2015-11.

6 ORDERS (2020-02) 787-10 DREAMLINER:

0 DC-10-30 (CF6-50C2) (46952), LST (AFS), "D" CHECK MAINT BY (MAS) 1998-05. SCRAPPED 2004-02.

8 +10 OPTIONS MD-11P (CF6-80C2D1F, 60,000 LBS) (557-48555, /93 PH-KCA "AMY JOHNSON;" 561-48556, /94 PH-KCB; 569-48557, /94 PH-KCC; 573-48558, /94 PH-KCD; 575-48559, /94 PH-KCE; 585-48561, /95 PH-KCG; 593-48563, /95 PH-KCI "MOEDER/MOTHER THERESA;" 612-48564, /97 PH-KCK), (ILF) LSD). 37C, 260Y.

1 A300B4-200F, (TNB) WET-LSD 2002-09.

1 A330-203 (CF6-80E2) (834, PH-AOK), (ILF) 6 YR LSD 2007-05. 243 PAX.

9 +15 OPTIONS A330-203 (CF6-80E1A3) (682, /05 PH-AOA "DAM - AMSTERDAM;" 686, /05 PH-AOB; 703, /05 PH-AOC; 738, /06 PH-AOD; 770, /06 PH-AOE "PARLIAMENT SQUARE - EDINBURGH;" 801, /06 PH-AOF; 811, /06 PH-AOH; 819, /07 PH-AOI; 900, /08 PH-AOL "PICADILLY CIRCUS - LONDON;" 1119), (ILF) LSD. 30C, 35PY, 178Y.

1 A330-203 (CF6-80E1A3) (925, /08 PH-AON "MUSEUMPLEIN - AMSTERDAM"), 406Y.

4 A330-303 (CF6-80E1A3) (1287, /12 PH-AKA; 1294, /12 PH-AKB; 1300, /12 PHAKD; 1381, /13 PH-AKE "PRACA DO ROSSIO - LISBOA"), (ALE), (GEF) LSD. 30C, 164Y.

43 ORDERS (2018-02) A350-900XWB (TRENT XWB):

12/2 ORDERS (10/09) A380-800 (ENGINE ALLIANCE GP7270, 76,500 LBS THRUST):

11 F 50 (PW 125B) (20232; 20233; 20252; EX-(ROS) (CITYHOPPER OPS), 20233; 20252; RTND (DEA) 2002-12. 50Y.

25 F 70 (TAY 620-15) (11562) (CITYHOPPER OPS) (11561, PH-KZM), 80Y.

0 F28-4000, 80Y. 4 RTRD.

3 SAAB 340A, LSD.

5 SAAB 340B, FOR SALE.

3 +2 OPTS EMBRAER EMB-145EU (AE3007A1) (216, PH-RXA, 2000-02), OPS BY KLM EXEL (320, PH-RXB; 106, PH-EXC, 2000-10). 106 WET-LST (MOL) 2001-05. 49Y.

5 +16 ORDERS EMBRAER E190.

Management:
(definitions)

Click below for photos:
KLM-1-PIETER ELBERS - 2014-08-A
KLM-1-PIETER ELBERS - 2014-08-B
KLM-1-Pieter Elbers - 2016-10.jpg
KLM-2-Peter Hartman - President - 2010-03
KLM-3-PIETER ELBERS - 2014-08-C
KLM-3-PIETER ELBERS - 2014-08-D
KLM-3-PIETER ELBERS - 2014-08-E
KLM-3-PIETER ELBERS - 2014-08-F
KLM-3-PIETER ELBERS - 2014-08-G
KLM-4-TOM DORTMANS EXEC VP KLM EM
KLM-5-Pieter Groeneveld - 2016-10.jpg
KLM-6-HARMEN LANSER - 2013-08

JEAN-MARC JANAILLAC, CHAIRMAN & CHIEF EXECUTIVE OFFICER (CEO) AIR FRANCE (AFA) - (KLM) GROUP & CHAIRMAN AIR FRANCE (2016-11).

PETER HARTMAN, DEPUTY (CEO), VICE CHAIRMAN (AFA) - (KLM) GROUP (2013-07).

FRANCK TERNER, (CEO) AIR FRANCE (2016-11).
Frank joined (AFA) in 1988 as a Concorde SST Production Engineer. He then worked his way through a series of Maintenance roles, becoming Head of Aircraft Maintenance at (AFA) subsidiary, Regional in 2002. He later became Executive VP Operations & Support at Regional and, in 2008, he became (COO) of Regional. In 2010, Terner was appointed Air France Industries (AFI) VP and, since July 1, 2013, he has been (AFA) - (KLM) Executive VP Engineering & Maintenance. Frank was later President (AFI) - (KLM) ENGINEERING & MAINTENANCE (E&M) from 2013-08.

PIETER ELBERS, (KLM) PRESIDENT & CHIEF EXECUTIVE OFFICER (CEO) (2014-10).

MS ANNE BRACHET, EXECUTIVE VP ENGINEERING & MAINTENANCE (AFA) - (KLM) GROUP (2017-01).
Anne was previously President Air France Industries (AFI) from 2013-08.

RENE DE GROOT, CHIEF OPERATING OFFICER (COO) (KLM) (2014-11).

FREDERIC GAGEY, AIR FRANCE (AFA) - (KLM) GROUP CHIEF FINANCIAL OFFICER (CFO) (2016-11).
Frederic has been Air France (AFA) (CEO) since 2013.

MARCEL DE NOOIJER, EXECUTIVE VP (AFA) - (KLM) CARGO (2017-01).
Marcel joined (KLM) in 1995 and has gained commercial and operational experience working in various positions at (KLM), and its Cargo division, as well as at (AFA) - (KLM).

PIERRE-FRANCOIS RIOLACCI, AIR FRANCE (AFA) - (KLM) GROUP CHIEF FINANCIAL OFFICER (CFO) RESIGNED (2016-11).

ERIK SWELHEIM, CHIEF FINANCIAL OFFICER (CFO) (KLM).

ERIK VARWIJK, MANAGING DIRECTOR (KLM) & EXECUTIVE VP AIRFRANCE/(KLM INTERNATIONAL & THE NETHERLANDS.

JACQUES LE PAPE, EXECUTIVE VP CORPORATE SECRETARY (2013-08).

JAN ERNST DE GROOT, EXECUTIVE VP GENERAL COUNSEL/CORPORATE CENTER & MANAGING DIRECTOR (2007-05).

ANTONIUS ("TON") DORTMANS, KLM EXECUTIVE VP ENGINEERING & MAINTENANCE (2012-01).
Ton Dortmans began his new duties on February 1st, succeeding Peter de Swert. He joined (KLM) in August 1985. From 1985 to 1996, he occupied several positions within (KLM) Engineering & Maintenance division. He moved to the Ground Services Division where he was responsible for the redesign of the ground handling processes. In 1998, he joined the Flight Operations division and from 2000 on he was VP Air Traffic Management (ATM) and later Deputy Executive VP Flight Operations. In 2005, he held the positions of Senior VP Operations Control Center in the Passenger Division. In December 2008, Ton returned to (KLM) (E&M), as Senior VP Operations & Deputy Executive VP and responsible for all maintenance, repair and overhaul (MRO)done on airplanes, components, engines and engineering activities.

September 2012: "FLIGHTGLOBAL" ARTICLE: - "IN FOCUS: COMPONENT & ENGINE (MRO) CENTRAL TO (KLM) (E&M) GROWTH."
Antonius "Ton" Dortmans succeeded Peter de Swert as (KLM) Engineering & Maintenance (E&M) Executive VP in February. Even though he had already been in the deputy post since 2008, Dortmans says it was nonetheless a challenging move in the current economic climate with all-pervading cost pressures.

In his previous role, he had worked out an action plan for how the Dutch Maintenance, Repair & Overhaul (MRO) provider will contribute to parent, Air France - (KLM) Group's "Transform 2015" program, which aims to reduce its debt by -€2.0 billion/-$2.5 billion by slashing costs and boosting revenue. But with the promotion to the top job came a shift in his perspective on strategy. "What I invented before, I now have to implement myself," he said.

Cost cuts will be the main focus for (KLM) (E&M), with reductions of between -10% and -20% depending on the area of activity. "In the airframe side, we have to make more steps, because we are less competitive there than in the engine and component sides," said Dortmans.

The (MRO) provider wants to continue conducting airframe maintenance at Schiphol (80% of which is for the parent carrier) but it is evaluating some outsourcing. Two years ago, (AFA) - (KLM) (E&M) stopped 747 "D" maintenance checks and moved the work for the parent fleet to the Asia Pacific region. "If costs are much higher than the market price [and] one is not able to lower costs and improve processes, then one should decide to outsource parts," he said.

The management wants to make work processes leaner and improve, for example, material supplies on the hangar floor to keep, as Dortmans puts it, "mechanics (MT) on the airplane". But it is also considering shifting work to its narrow body subsidiary, (KLM) UK (AUK) Engineering, in Norwich, England.

The UK facility offers lower labor costs than Amsterdam, and in spite of fierce competition from around 50 European airframe maintenance providers for the 737 (which (KLM) UK (AUK) Engineering specializes in) it is showing small growth with "positive pre-tax earnings", according to Dortmans.

The site also needs new capabilities for airplanes that will be relevant in the future. While (AUK) services ATR turboprops, the existing capabilities for BAE Systems 146/Avro RJ, Fokker F 50 and F 100 regional airplanes will become obsolete over the next few years. A survey of new models is under way, but the outcome is not yet clear.

* ENGINE AND COMPONENTS:

The main growth is to come through component and engine support, as well as more international business, although Dortmans declines to give specific targets. Around 50% and 60% of the (MRO) provider's respective component and engine work is for third-party clients.

(KLM) (E&M) wants to maintain the engines for its parent's future 787 and A350 fleet in house, and offer these capabilities to other operators too. But the negotiations with the engine manufacturers appear to have been complicated by the group's aftermarket ambitions, especially for the exclusively Rolls-Royce (RRC) (Trent XWB)-powered A350.

While Air France (AFA) and (KLM) have thus far opted for General Electric (GEC) engines on their fleets, the group says it would be possible to establish overhaul lines for both (Trent XWB) and (GEnx) engines, if it were to stay with (GE) on the 787.

"We would like to be on the [third-party] market also for Rolls-Royce (RRC) engines," says Dortmans. "But that's not only down to us, but also the supplier." He added that (RRC) is protecting the aftermarket "a little more than (GEC)", and that it is too early to comment on whether a co-operation would be possible.

It is questionable to what extent Rolls-Royce (RRC) is interested in another European overhaul shop, given that it has a (MRO) joint venture called "N3 Engine Overhaul Services" with Lufthansa Technik (DLH) (LTK) in Germany.

On the component side, (KLM) (E&M) is taking more visible steps towards the future. In April, the group inked a partnership with Hamilton Sundstrand to service the manufacturer's 787 components, for which (LOT) Polish Airlines has become the first customer. Other key strategic types are Embraer (EMB)'s EMB-170 and EMB-190 series, the A350 and (KLM)'s short-haul backbone: - the 737.

(KLM) (E&M) will open two component repair shops in China with unnamed local partners. One will focus on avionics, while the other specializes in mechanical equipment. Dortmans says that aside from establishing new capabilities, the (MRO) provider wants to grow its global footprint in regions where airlines will not send their components to Europe. This will be done through partnerships and joint ventures rather than takeovers, he added.

MS ADELINE CHALLON-KEMOUN, EXECUTIVE VP MARKETING, DIGITAL & COMMUNICATION (2015-07).

MICHEL COUMENS, MANAGING DIRECTOR KLM UK (AUK) (2006-03).

VINCENT D'ANDREA, (CEO) ENGINE PART REPAIR SUBSIDIARY (CRMA), AIRFRANCE INDUSTRIES/(KLM) (E&M) (2012-12).

MICHAEL WISBRUN, EXECUTIVE VP CARGO DIVISION (2000-09).

MS BARBARA C P VAN KOPPEN, COMPANY SECRETARY (2005-09) & GENERAL COUNSEL (2007-09).

CAPTAIN YPE DE HAAN, EXECUTIVE VP OPERATIONS (2007-07).

WILLEM KOOIJMAN, EXECUTIVE VP HUMAN RESOURCES (HR) & ORGANIZATION.

RENE KALMANN, EXECUTIVE VP FLEET DEVELOPMENT.

BRAM GRABER, EXECUTIVE VP PASSENGER STRATEGY, EX-MANAGING DIRECTOR TRANSAVIA (TAV) (2013-08).

HANS DE ROOS, EXECUTIVE VP PASSENGER BUSINESS (2004-03).

PAUL ELICH, EXECUTIVE VP GROUND SERVICES (2007-06).

BOET KREIKEN, EXECUTIVE VP & CHIEF INFORMATION OFFICER (CIO).

VINCENT KNOOPS, SENIOR VP CORPORATE COMMUNICATIONS (2008-11).

HANS ERIC KUIPERI, SENIOR VP & GENERAL SECRETARY.

ROBIN HOYTEMA VAN KONIJENBURG, SENIOR VP FINANCE.

AREND DE JONG, SENIOR VP MARKETING & NETWORK (2006-08).

ELFRIEKE CAN GALEN, SENIOR VP CORPORATE COMMUNICATIONS & CORPORATE SOCIAL RESPONSIBILITY (2007-05).

JAN WITSENBOER, SENIOR VP CORPORATE FLEET DEVELOPMENT.

MS NINA JONSSON, SENIOR VP FLEET MANAGEMENT, EX-(UAL), (AMW)/(USA) (2015-07).
Nina has previously held the positions of United Airlines (UAL) Director Fleet Planning and US Airways (AMW)/(USA) Director Fleet Management.

PATRICK ROUX, SENIOR VP ALLIANCES (AFA) - (KLM) (2015-12).
Patrick was previously Senior VP Asia Pacific.

SIMONE WICKENHAGEN, GENERAL MANAGER (KLM) NORTHERN EUROPE (2006-01).

STEPHANE ORMAND, VP & GENERAL MANAGER AIR FRANCE (AFA) - (KLM) USA (2017-03).

EDWIN VERVER, VP MARKETING & BRAND (2006-01).

CAPTAIN NAND DRESSCHER, VP FLIGHT OPERATIONS (SPLOAKL).

ROBERT KUNEN, VP COCKPIT CREW SERVICES.

WARNER VAN DER VEER-JEHEE, VP SAFETY & QUALITY.

JOHAN BANK, VP ENGINEERING KLM ENGINEERING & MAINTENANCE (2014-13).

LEN BERREVOETS, VP (CF6) POWERPLANT SERVICES (2001-05).

CASPER DE JONG, VP MATERIAL SERVICES (2001-12).

MARC LAMMENS, VP COMMERCIAL STRATEGIES (2007-04).

HARM KREULEN, VP & AREA MANAGER ASIA-PACIFIC (2006-01).

MS KAREN BERG, VP SALES, USA & CANADA (2008-11).

JONATHAN SOESMAN, VP SALES SOUTHERN EUROPE (2008-11).

MARJAN RINTEL, VP HUB OPERATIONS (2007-06).

PETER SLOBBE, VP FLEET SERVICES.

PIETER GROENEVELD, VP NETWORK PLANNING.

CAPTAIN MARTEN VAN POLL, CHIEF PILOT.

FRANK DE REIJ, PROJECT LEADER PROCUREMENT (AFA)/(KLM) (2007-06).

CAPTAIN FRED WEBER, DIRECTOR FLIGHT OPERATIONS 737.

CAPTAIN KAREL STUURMAN, DIRECTOR FLIGHT OPERATIONS 747-300.

CAPTAIN NICK VAN DER LINDEN, DIRECTOR FLIGHT OPERATIONS 747-400.

CAPTAIN HARM VAN DER POLL, DIRECTOR FLIGHT OPERATIONS 767-300.

CAPTAIN KLAAS KUIN, DIRECTOR FLIGHT OPERATIONS MD-11.

PAUL VAN WESTHOVEN, DIRECTOR ENGINEERING (2003-04).

JAMES KORNBERG, DIRECTOR ENGINEERING & MAINTENANCE INNOVATION (2015-09).

BAS VAN DROOGE, DIRECTOR WIDE BODY BASE MAINTENANCE (SPLCEKL)
(sw-van.drooge@td.klm.com) (2003-04).

HARMEN LANSER, DIRECTOR COMPONENT MANAGEMENT, (KLM) (E&M).

JEFF OPDAM, DIRECTOR 747/MD-11/767 MAINTENANCE (1998-02).

HANS LUCAS, DIRECTOR 737 MAINTENANCE.

LEO VAN RIJN, DIRECTOR LINE MAINTENANCE (2001-12).

LEO HULST, DIRECTOR QUALITY ASSURANCE (QA) (2002-05).

CEES DE VOS, DIRECTOR SYSTEMS SERVICES.

RODERIK RODERMOND, DIRECTOR MARKETING (2006-01).

VIKRAM SINGH, DIRECTOR CUSTOMER RELATIONSHIP (2006-01).

WELMER BLOM, DIRECTOR SALES & SERVICES (2007-04).

HARM KREULEN, KLM NETHERLANDS DIRECTOR.

NICOLAS HENIN, COMMERCIAL DIRECTOR UK & IRELAND (2013-09).

WARNER ROOTLIEP, GENERAL MANAGER UK & IRELAND (2013-09).

ERIC VERMEULEN, PROJECT MANAGER 767 MAINTENANCE.

BEN LARMMERS, ENGINEERING MANAGER TECHNICAL INFO.

ERWIN PETERSON, MANAGER MAINTENANCE SUPPORT CENTER.

RON DE BOS, HEAD OF SALES, NORTH AMERICA (2012-04).

GIJS VAN POPTA, HEAD OF SALES (2013-09).

PIETER CORNELISSE, HEAD MAINPORT STRATEGY.

ERWIN BOSMA, INFORMATION TECHNOLOGY MANAGER.

RUUD KLEINENDORST, MANAGER PROJECT DEVELOPMENT (klm75024@td.klm.nl).

LEN BERREVOETS, MANAGER (CF6) MAINTENANCE UNIT (2001-02).

C VERBEEK, TECHNICAL MANAGER, KLM UK (AUK).

 
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